The division of marital and separate property between the spouses is one of the most time-consuming and complex parts of a divorce. Fortunately, it is possible to create an irrevocable trust before marriage to shield assets from the division process that occurs during a divorce. This option is available because many people encounter increased challenges in protecting assets after they have married.
Irrevocable Trusts can Protect Beneficiaries
If you are the beneficiary of a person’s estate, you have not yet received any assets and there is a risk with some types of estate planning structures that a divorce could leave you incapable of receiving assets. Fortunately, the terms of an irrevocable trust cannot be changed or modified even by a divorce, which means that the assets will remain dedicated to a beneficiary even though your inheritance is currently unrealized.
Using an Irrevocable Trust While Planning for a Marriage
People who create irrevocable trusts and place assets in them before marriage are never at risk of having these assets classified as marital property or having them divided in a divorce. This is because the irrevocable trust is considered to own the assets rather than the individual. The risk of this is that an irrevocable trust exists forever and a person cannot get these assets back at a later date if he or she decides to share them with a spouse.
Instead of an irrevocable trust, it is possible to use a prenuptial agreement to protect assets from the distribution process during a divorce.
Shielding Assets in an Irrevocable Trust
Assets that a person acquires during a marriage are classified as marital property. In some situations, an irrevocable trust is capable of protecting assets from the distribution process that occurs during a divorce.
If you place assets in an irrevocable trust and your spouse is aware of it, these assets will likely be protected from distribution. If you transfer assets to an irrevocable trust in anticipation of a divorce, however, a court might consider this a fraudulent transaction.
It is not possible to deliberately remove assets from marital ownership only so a soon-to-be former spouse will not receive them. In these situations, a judge can order the irrevocable trust to be dissolved and divide the assets among the couple.
Following a Grantor’s Death
In Georgia, the appreciation of separate property is classified as a marital asset. This means that if assets held in a trust appreciate during a marriage, a spouse might have the right to claim a share of this increase. If a trust is discretionary, however, the trustee has the power to take a trust out of the division of property during a divorce.
Speak With a Skilled Divorce Lawyer Today
The property division during divorce is an often feared and nerve-wracking process. Irrevocable trusts are just one of several strategies that can be utilized to protect a person’s assets during a divorce. If you need the assistance of an experienced divorce attorney, do not hesitate to contact Vayman & Teitelbaum, P.C. today.