How Can I Protect My Children’s Trusts From Divorce in California?

How Can I Protect My Children’s Trusts From Divorce in California?

When trying to protect assets and wealth throughout generations, many people use trusts to do so. However, common provisions for a trust may not do so in the event that the beneficiary and their spouse go through a divorce. During a divorce, assets are subject to equitable distribution, which can result in losses. It is because of this that it is important to put certain provisions in place that can protect these assets in the event of these situations. Continue reading below to learn more about how to do so and contact an experienced California estate planning attorney for assistance.

Should Distributions be Certain?

While certainty can seem like a positive thing when estate planning, it can have unintended consequences when it comes to trust provisions regarding beneficiary distributions. In a divorce, there is a greater chance a judge will consider trust assets during the division of assets if it appears the beneficiary is certain to receive distributions from it. The specific phrasing used in trust documents can have a large impact on how this process goes. Phrases such as “shall distribute” or stating that distributions “will be made” can imply a guarantee. It is because of this that risks can be reduced by making distributions look like they can be expected rather than guaranteed. This can be done by substituting the words “shall” or “will” with the word “may” in all documents. 

Naming Multiple Beneficiaries

Another strategy to protect a trust from divorce is by naming multiple beneficiaries. This can include beneficiaries in subsequent generations. This demonstrates that the assets within the trust are meant to benefit more than the individual going through the divorce. 

Consider Alternatives to Direct Distributions

When assets are kept inside a trust and managed by a trustee, it makes it easier to convince the court the assets should not be considered in a divorce. In addition to this, it ensures the beneficiary can benefit from the protections of the trust. Sometimes, trusts are written to have scheduled distributions based on certain events, such as reaching a specific age or getting married. However, once the money in a trust is distributed, it is no longer protected. It is because of this that, instead of directly distributing funds from the trust to the beneficiary throughout their lifetime, the trustee can make payments on behalf of the beneficiary for their benefit. 

Contact our Firm

Working with an experienced estate planning attorney, such as Jaci Feldman of the Woodland Hills, California, Law Office of Yacoba Ann Feldman, will ensure that you are taken care of when you need it most.Contact The Law Offices of Yacoba Ann Feldman to schedule a consultation today.

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