A Guide to Using a Trust To Protect Assets From Divorce
Using a Trust to Protect Assets From Divorce
It is an unfortunate fact that marriages don’t always last, but if you get a trust to protect your assets from divorce it may provide increased peace of mind. Although you don’t intend to get divorced when you originally marry, the future is unknown and you still should take measures to ensure your money and properties don’t fall into the hands of another.
Typically, any assets you owned before your marriage are considered separate, rather than marital properties. Unfortunately, assets are often combined, such as in a joint bank account, etc. If you keep your finances and other properties that you brought into the relationship in a trust, they are more protected and, therefore, less likely to be divided during a marital dissolution.
Estate planning lawyers can help you determine whether a trust is right for you, as well as draft one that is most likely to successfully preserve your assets.
How Marital Assets Are Categorized: Marital Property vs Separate Property
Divorce proceedings are different from state to state. Where some states are considered community property states meaning that all assets are included, whether they were accumulated during the marriage or previously acquired, Colorado is an equitable distribution state. Under Colorado Revised Statute Section 14-10-113, each party retains the property they entered the union with, and the marital assets are divided fairly.
Creating a trust offers many benefits. Not only does it protect your assets, but it also maintains assets designed to be passed to your child, and helps your family avoid probate upon your death. Ultimately, it enables you to control how your money and properties are to be distributed.
Estate law covers trusts and the right estate lawyer may be able to help you separate assets and protect your interests.
Are Assets in a Trust Protected From Divorce?
As the separation proceeds, you may wonder, “Are assets in a trust protected from divorce?” The short answer is, “yes.” Previously owned property of the divorcing spouse is considered separate property during divorce proceedings. Marital property is generally distributed “equitably.” This is not, however, an exact science. A trust protects assets from divorce by removing them from “marital property” and placing them in the trust.
Estate planning lawyers have access to the financial information of their clients, which makes choosing a reputable law firm that you trust is imperative. A qualified attorney should be able to offer substantial details about their strategy and resources.
How Does Trust Protect Assets From Divorce?
Many are unsure how a trust protects assets from divorce. It depends on your specific circumstances. The primary consideration is whether you are married at the time you are seeking a trust.
If you have assets you want to protect and are not already married, you can have your estate placed in a living trust, also referred to as a revocable trust. With this type of trust, you will be the creator, trustee or manager, and the beneficiary. You should also name a beneficiary to take over the trust upon your death. All assets in the trust are not considered marital property.
How to Protect Trust Assets in Divorce Proceedings If You’re Already Married
You can still create a trust to protect your assets if you are already married. This is usually done with a Domestic Asset Protection Trust (DAPT), which is an irrevocable trust. Once this type of trust is created, it can’t be canceled and the creator has no claim to the assets.
Since this is so complex, it is necessary to hire an experienced estate attorney to prepare the trust to ensure the paperwork covers all the important aspects.
Choosing an Estate Lawyer for Protecting Assets
When you are choosing an estate lawyer to prepare a trust and protect your assets from divorce, you want one that prides themselves in developing an excellent attorney-client relationship and offering sound legal advice.
If you are in the market for an estate planning attorney, you should ask about their specialties to ensure they cover the services you require. A living trust in Colorado is different from the other types of trust. Therefore, you want to work with a law firm that has experience in that type of trust.
How to Protect Your Assets From Divorce Using Trust
An experienced trust attorney can explain how to protect your assets from divorce using a trust. When you and your legal support are developing your estate plan, there are several things that you might want to consider including potential child support, support of other family members, and tax advice.
There are several types of trusts that offer greater protection during a divorce action, such as:
- Irrevocable trusts
- Revocable trusts
- Self-settled trusts
Some of the aspects that may be covered by the trust are income earned, an investment account, a marital asset, property, and other assets held that are subject to division. Without a thorough plan, your divorce might suffer unintended consequences. Hiring the right law firm could describe the main difference between the kinds of trusts available in divorce cases and help you avoid probate.
Can a Trust Protect Assets From Divorce?
Spouses may be unsure if they can use a trust to protect their assets from a divorce. Although it is not the only reason to have an attorney, it is one of the primary ways in which your property can be maintained upon the dissolution of your marriage.
This may be especially true when the divorce is not amicable and one spouse chooses to make things difficult for the other spouse. Having a trust will constitute legal precedents that make the rest of the process go more smoothly, as everything is predetermined.
Why You Should Protect Your Assets From Divorce With Trust Strategies
In the event of a divorce, your legal representative will describe why you should protect your assets from divorce with a trust.
As a general rule, a qualified attorney will help protect the assets of the non-beneficiary spouse from the beneficiary’s creditors depending on the information contained in the facts that constitute a legal document during a separation.
Putting Your Assets in Trust Before Marriage to Protect From Divorce
If you want to secure your funds from a potential ex-spouse for your beneficiaries, putting your assets in a trust before marriage to protect them from divorce may be your best option.
Since you will be discussing sensitive financial subjects with your trusts lawyer, you want a legal counselor who is compassionate, knowledgeable, and thorough. Contact legacy Law for a consultation to determine if they are the right firm to help you develop a trust to protect your assets in a divorce.
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“My wife and I are very grateful for the careful explanation of the value of having our estate plan in place. Matt Meuli patiently answered all of our questions and made sure we had all the information we needed. We highly recommend Meuli Law Office for your estate planning needs. Now our beneficiaries will be in great hands and not have to struggle through so many unknowns.”
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“Matthew Meuli, Attorney/Counselor has been a friend of mine and Linda’s for the past four years. Matt and I met through Business Network International. At BNI Matt presented himself as a very qualified counselor for planning a trust. I had been a beneficiary of my mother’s trust and learned the value of a will versus a trust. We were able to set up the L&L Trust in an easy and understandable way with Matt’s professional help. As we have seen in the last two months life can change in a moment and having a trust in place gives us tremendous security.”
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“When my father passed unexpectedly, it was surprising how much was involved. We had no idea what to do, where to go, how to find info that wasn’t written on his 1 page handwritten will. We will be forever grateful that we had Matt Meuli by our side showing us how to navigate through my father’s poorly prepared will. We have since set up a trust for our little ones and have no worries for those left behind. Matt thoroughly explained each part of the process in an easy to understand way. We now have peace of mind. Thank you Matt!”