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Trusts and High Asset Divorce

Posted on in High Asset Divorce

TX high asset divorce lawyerWhen considering divorce and the division of assets that must inevitably follow, it is important for divorcing couples to remember to account for all trusts that they have established, including those created prior to their marriage. Depending on when it was created and the types of funds and assets that it contains, a trust might completely protect one spouse’s property from division during divorce. On the other hand, the contents of a trust might still end up being divided equitably between the spouses. If you or your spouse have a trust in place and have questions about its fate in the event of divorce, you should consider consulting with a high asset divorce lawyer who can advise you.

Irrevocable Trusts

Although Texas courts have not addressed all types of trusts in relation to divorce, a number of judges have indicated that separate irrevocable trusts, when created prior to a marriage, do shield separate property from marital property. As a result, the contents of those trusts are not subject to division upon divorce. In fact, even the income from these types of trusts, even if it was earned during the marriage, will remain separate property and so also won’t be subject to division. However, this is only true if the beneficiary of the trust, whether the spouse him or herself or a third party, will not be considered to have a present possessory right to any of the assets contained in the trust. In the event that the trustor is granted a present possessory right to a portion of the trust, then the income would become marital property and would have to be divided equitably between the parties.

Trusts created in a will or as part of a gift may also be protected from a spouse upon divorce, as it is well-established in Texas that gifts and inheritances given to one spouse during a marriage, will remain in that individual’s sole possession after divorce. There are, however, some exceptions to this when it comes to trusts, so even those who receive trusts as a gift or as part of an inheritance should still speak with an attorney.

It’s also important to note that one spouse’s decision to siphon marital property into a trust during the marriage in an effort to deplete the couple’s estate prior to divorce constitutes fraud, giving the other spouse the right to seek compensation in return.

Call Our Legal Team Today

If you are going through a divorce and have unique or valuable assets, you need the advice of an aggressive Georgetown high asset divorce attorney who has the experience and resources to protect your interests. This is especially true for couples who have established trusts, as this is still an evolving area of the law. At The Law Offices of William D. Powers, our legal team can walk you through your options. Please contact us today to learn more.

Source:

https://www.baylor.edu/law/facultystaff/doc.php/199726.pdf

https://www.forbes.com/sites/jefflanders/2012/07/18/can-a-trust-protect-my-assets-in-divorce/#7cb54705377d

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