Can a Trust Protect Assets in a Divorce?
A trust is an important estate planning tool that can also be used to protect your assets in the event of a divorce.
A trust allows you to transfer ownership of certain assets you possess to a third party trustee so that they may be distributed to your designated beneficiaries. In addition to end-of-life benefits, a trust can also provide important protections in the event of a divorce in order to ensure separate property assets remain separate.
How Does a Trust Work?
Many people are familiar with trust funds as a way of passing wealth from one generation to the next. Regardless of your income or the amount of property you possess, estate planning attorneys frequently recommend trusts as a way of protecting the best interests of clients and ensuring their final wishes are observed.
A trust is a legal vehicle that transfers ownership of money, personal property, and real estate into an account that is managed by a third-party trustee. This trustee has a fiduciary duty to manage assets in your trust in a financially sound manner and in accordance with your interests. In the event of your passing, a trust allows your loved ones to avoid Brazoria County probate court proceedings, if that is something that is important to the client. Additional potential benefits of a trust include:
- Shields assets from creditor claims;
- Allows you to set terms regarding how assets are distributed to beneficiaries;
- Can be used in Medicaid planning, to ensure future long-term care costs are met.
How can a Trust Benefit Me in Divorce?
While many of the benefits of a trust center on end-of-life issues, a trust also helps to protect your assets at other times in life. This includes when going through a divorce.
Texas is what is referred to as a community property state. Under the Texas Family Code, when married couples get divorced, any property and assets earned, acquired, or otherwise accumulated by either party during the marriage are divided equally between both. Common assets subject to division in a divorce include:
- Homes, land, and other types of real estate;
- Cars, trucks, motorcycles, and other vehicles;
- Boats, jet skis, campers, and other recreational equipment;
- Personal belongings, such as furniture;
- Antiques, artwork, and other collectibles;
- Shares in any businesses you own;
- Money in savings or checking accounts, investments, and other funds;
- Retirement benefits.
If you have separate property or receive an inheritance during your marriage a trust can be used to protect you to ensure these separate property assets are not part of the community estate.
Consult with Our Lake Jackson, Texas Trust Attorneys
To discuss your options in creating a trust and how it can benefit you now and in the years to come, reach out to Cordoba Law Firm, PLLC. Call or contact our Lake Jackson trust attorneys online and request a consultation today.