A revocable, or living, trust is an estate planning tool established during a person’s lifetime, where assets are held for the benefit of the grantor, often with the grantor acting as trustee. These trusts can be altered or terminated by the grantor. In dissolution proceedings, the treatment of these trusts depends on several factors, primarily when and how the trust was created and funded. For example, if a trust was established and funded before the marriage with the grantor’s separate property, those assets may remain separate and not subject to division. However, assets contributed during the marriage, or assets commingled with marital property, are likely subject to division.
Understanding the impact of divorce on such trusts is crucial for ensuring equitable asset distribution and protecting individual financial interests. Historically, trusts were often viewed as separate entities, but modern family law has evolved to scrutinize their creation, funding, and purpose within the marital context. A thorough evaluation is necessary to determine whether trust assets should be considered part of the marital estate. Furthermore, failing to properly address trust assets can lead to costly litigation and unintended financial consequences for both parties involved.
