What Happens To Your Trust While Going Through A Divorce?

Hi, there. Bridget Mackay from the law offices of Bridget Mackay. I do estate planning and elder law in Petaluma, California.

Today, I want to talk about a question I had from a client the other day who’s getting a divorce. We did a trust for them. The question from the client was, “Can I just go and do a separate trust and transfer all my assets in there?” Well, when divorce and estate planning collide, there are some yes and no to those questions.

Number one, until your divorce is final or until there is a final resolution of where assets are being split and who gets what, you cannot really transfer those assets into a separate single trust. You have to wait until a final dissolution of the property, and that’s according to family law codes. The second is in terms of minor children and guardianship, nine times out 10, your ex-spouse, no matter how you feel about them, will have to be named as a primary guardian to them if something should happen to you. Unless you can prove abuse or something else going on or they have lost legal custody and physical custody, then most likely, you usually have to name the ex-spouse as the primary guardian of children.

Finally, if you’re concerned about assets, you could revoke your current joint trust without your ex-spouse’s or soon to be ex-spouse’s approval. You just have to give them notice that you’ve revoked the trust and that will revoke the dispositions in that document and make it moot. You could create your own single trust. The problem is that you cannot fund or transfer any assets into that, as I said in problem number one, until you have a final dissolution or a final distribution of the assets.

In the meantime, clients have done wills, where if something were to happen to them, then they can say who they want those assets to go to, if they want it in trust for minor children or whatever, and that’s a placeholder until they have a final resolution of the distribution of assets. Always consult a qualified divorce attorney and a qualified estate planning attorney before you make any decisions regarding transferring property or creating a new estate plan after a divorce.

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