Does a Trust Protect Assets From Divorce?

divorce lawyers in indiana

There are many procedures necessary to finalize divorce proceedings, one of which is the division of marital property, or marital assets. Many individuals filing for divorce may also have previously established trust and are wondering, “Are my trust assets protected during a divorce?”

At Webster & Garino LLC, our experienced trust attorneys have the answer. As part of our comprehensive estate planning solutions, we proudly serve residents of Westfield, Indiana, and the surrounding areas with dedicated services for establishing and maintaining legal trusts.

Contact us today to speak with a certified estate planning attorney, and read on for more information about how to protect trust assets in all legal scenarios.

What is a Trust?

A legal trust is an efficient way to ensure the desired distribution of your financial legacy is carried out upon your death. This binding contract includes a grantor who is the creator of the trust, a trustee who the grantor names to manage the trust, and beneficiaries, or the individuals who will receive your assets. Many people choose to create a trust document when they want to avoid probate and keep such assets out of the public record.

Types of Trusts: Irrevocable Trust vs. Revocable Trust

There are two main types of trusts: irrevocable trusts and revocable trusts. The main difference between the two is the ability to alter the trust after its initial creation.

With a revocable trust, the grantor can typically make modifications with ease, but an irrevocable trust is designed not to be changed unless under extremely extenuating circumstances. A revocable trust allows you to alter the names and amount of beneficiaries, the assets included and how they will be distributed, as well as the trust’s standing.

Can a Trust Protect My Assets During a Divorce?

A revocable trust will not protect or exclude your assets in an Indiana divorce. Since a revocable trust is revocable, meaning you still have control over the assets, your assets held in said trust are considered marital property.

In some cases, an irrevocable trust may be efficient in protecting assets from divorce and creditors. In these cases, you no longer have control over the assets, so they might be considered separate assets from your marital estate depending on the circumstances. It’s important to note though that in the case your former spouse may be listed as a beneficiary in your irrevocable trust, they cannot be removed as a beneficiary and will still receive their allotted portion of your assets after death whether you’re married or not unless otherwise stated in the trust.

To learn what options may be available for your unique trust, contact one of our legal trust lawyers for a complimentary case review.

Factors That Affect Trust Assets During Divorce

1. Timing

Timing is the most important aspect of any estate planning. In the case of establishing a trust that will allow you to transfer assets to loved ones without interference from a divorce proceeding, you need to plan ahead.

Placing your assets within a carefully designed irrevocable trust before you get married may help segregate those assets from the marital estate and shield them from a future spouse. The trust becomes the owner of the assets instead of one spouse.

Setting up a trust or entity for yourself before marriage does not require a future spouse’s approval, unlike a premarital or postnuptial agreement that requires agreement from both parties. However, making a trust or setting up an entity after you enter a marriage may affect your ability to effectively shield assets from an future or ex-spouse.

Often questions about how to shield assets from a divorce arise after a divorce is filed. But in essence, you cannot use a trust or business entity once the divorce has been filed to segregate assets from a marital estate because courts can interpret that as a fraudulent conveyance. In other words, if transfers are made just prior to filing for a divorce, or after such a filing, a judge may find that you dissipated marital assets.

If you want to know more about this form of legal protection, contact one of our trust attorneys at Webster & Garino LLC.

2. Spouse as Trust Beneficiary

An irrevocable trust that names a spouse as a beneficiary cannot be altered because of a divorce. An ex-spouse who began as a spouse beneficiary will likely receive distributions under the terms of the trust. Naming a contingent beneficiary if divorce occurs when you initially create the trust could be an effective way to protect your trust property against this outcome.

3. Trust Income

Assets within an irrevocable trust may be out of a future or ex-spouse’s reach, but income distributed by a trust can influence calculations for child support in the case of divorce.

Many complex variables apply in these situations, and the advice of our experienced estate planning attorneys is the best thing to prepare you to protect your interests in court if this situation arises. Contact Webster & Garino LLC today to learn more.

Trusts & Legal Entities and Business Owners

For business owners, the conversation about trusts and inherited assets in a divorce only becomes more complicated.

A trust could help prevent the other spouse from gaining control or management of a grantor’s company, but that varies wildly based on your particular circumstances and facts. Your trust can outline successor trustees or management succession plans that could allow your spouse to receive income but limit his or her ability to actively manage the asset.  The specific type of trust or business entity you create will determine your ability to protect your assets, which makes experiencing legal advice even more necessary to design a sound business asset protection system.

Professional Trust Creation for Every Phase of Life

Whether you’re young and single, happily married, or at the phase where you’re having tough conversations about your mortality, the estate planning lawyers at Webster & Garino LLC have the experience you need to protect your assets. Our goal is to provide optimized trust creation and management services that meet your distribution goals while also adhering to any applicable state law.

We can evaluate your position before or during a divorce and help you pursue an equitable settlement that represents your long-term financial interests. Contact us today at (317)680-5763 to schedule a complimentary case review.


The information contained in this website/webpage, including, but not limited to, written material, recorded material,l and/or video/visual material is provided for informational purposes only, and should not be construed as legal advice on any matter.

The transmission and receipt of information on or through this website, in whole or in part, or communication with Webster & Garino LLC via the Internet or e-mail through this website does not constitute or create an attorney-client relationship between us and any recipient. You should not send us confidential information in response to this website or webpage. Such responses will not create an attorney-client relationship, and whatever you disclose to us will not be privileged or confidential unless we agree to act as your legal counsel and you have signed an engagement letter with Webster & Garino LLC. The material on this website/webpage may not reflect the most current legal developments. The content and interpretation of the law addressed herein is subject to revision. We disclaim all liability with respect to actions taken or not taken based on any and all of the contents of the website/webpage to the fullest extent provided by law. Do not act or refrain from acting based upon this educational information only without seeking your own professional legal counsel.