Married couples of high net worth often establish a family trust to handle distribution of assets to beneficiaries and charities. In the event of divorce, the trust must be characterized as separate property or marital property, subject to distribution of assets or control of the trust fund. In the event the trust is characterized as separate property of one spouse, the other spouse may receive an equitable share of the appreciated value over the course of the marriage.
Many wealthy individuals enter into a second marriage with a family trust already in place. A prenuptial agreement is often used to protect the original value of the trust assets. The prenuptial or post-nuptial agreement will be subject to litigation if the other spouse can show that the assets appreciated in value because of marital contributions or were commingled with marital assets.
Dividing Trust Accounts
If a family trust will be part of your marital property settlement in your pending divorce, make sure your attorney understands the laws relating to high net worth property distribution in Missouri and Illinois. For more than a decade, Kirk Stange of Stange Law Firm, PC, has been providing experienced, intelligent representation for people of high net worth going through divorce.
There are many complex financial issues relating to family trusts in divorce, including:
- Transmutation of assets and characterization as separate or marital property
- Tax issues relating to the trust fund
- Appreciation of value over the duration of the marriage
- Litigation of prenuptial agreements affecting the characterization of the trust fund
You can also read an article written by Kirk C. Stange for more information on this topic titled: An Overview: Trust Division and Divorce or Domestic Asset Protection Trusts versus Prenuptial Agreements: What is the best option?