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How will trust assets be impacted by a divorce?

On Behalf of | Jun 20, 2023 | DIVORCE - Divorce, FAMILY LAW - Divorce |

Assets in a Florida divorce that were acquired during the marriage are typically split evenly between the couple, or in a way that makes sense for the individual’s circumstances. Dividing trust assets can be more complicated.

Are there rules for trust assets in divorce?

Unless a spouse is directly named as a beneficiary in a trust, they are usually not entitled to any of the trust assets during the divorce. This is because they are often treated as not belonging to the beneficiary.

That isn’t true all of the time. If the beneficiary has mixed their inheritance with married assets, the inheritance becomes marital property. One example of this is putting trust assets or inheritance payouts in a joint checking account, or if you have been using the trust assets for general living expenses.

The judge could also rule that some of the trust assets are given to your estranged spouse, but this is rare and will depend on the circumstances of the divorce. An example is if your ex-spouse has no way to earn money or provide for themselves immediately after the divorce.

How to protect trust assets during a divorce

Hopefully, the trust grantor – the person setting up the trust – will consider how divorce could impact their beneficiaries. The court will be less inclined to include the trust assets in the divorce if the wording of the trust doesn’t guarantee that the beneficiary will receive certain assets.

The court will also be unable to alter the trust if it is an irrevocable trust. If the trust is already created, it doesn’t mean protections can’t be added. If the trust grantor is still alive, they might be able to add language that clarifies the trust assets cannot be distributed to non-beneficiaries regardless of marital status.