When a "trust" is mentioned, it is usually in the context of estate planning. When individuals are contemplating how to best construct their financial plan for wealth distribution after death, trusts are often used as a means to ensure that their wishes are specifically upheld.
However, trusts can also play a role in high-asset divorce cases. Trusts are flexible in the sense that they can be drafted to serve many different purposes. In a recent article for Forbes, financial guru Jeff Landers argues that trusts can play a significant role in asset protection during divorce, depending on the financial circumstance of the individuals involved.
Trusts do not enable individuals to thwart the general rules of asset division in a divorce. For example, assets acquired before marriage which are placed in trusts are generally considered separate property, just as they would be had they not been placed in a trust.
However, trusts can be used proactively to ensure that assets acquired before marriage, such as a business, remain tied to a single party only for the duration of the marriage. For example, Domestic or Foreign Asset Protection Trusts established to house a business allows the trust to own said business. As a result, an individual's spouse would be unable to touch the business in the event of a divorce.
In addition to preventative benefits, trusts can be used to ensure that assets split up during the divorce are delivered to intended beneficiaries, such as children. Trusts can help to ensure that emotionally messy divorces or manipulative parties cannot touch various protected assets after the trusts have been created.
Trusts are both uniquely beneficial and uniquely complicated creations. Those with questions about trusts and asset protection should speak with an experienced attorney.
Source: Forbes, "Can a Trust Protect My Assets in Divorce?" Jeff Landers, July 18, 2012
Source: http://www.buffalodivorcelawfirm.com/2012/08/asset-protection-during-divorce-via-a-trust.shtml
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