How to Use Trusts to Protect Assets from Divorce
A divorce in Missouri can threaten your hard-earned assets, as they may be divided between you and your ex-spouse by the courts. One way to protect your assets from divorce is through the use of trusts. Trusts can be effective tools for asset protection, but their success requires careful planning and considerations regarding Missouri’s trust laws. A trust attorney in St. Louis can help you navigate these complexities.
Utilizing Trusts to Protect Assets From Division in a Missouri Divorce Case
Missouri is an equitable division divorce state. This means that if a divorce case goes to court, a judge will divide all marital property fairly and reasonably. This may or may not mean a 50/50 split. If structured and planned properly, a trust can protect your assets from equitable division in the event of divorce.
You can protect your assets by creating a revocable trust before marriage. With this type of trust, your assets will be considered your separate property, meaning they will not be divisible in the event of divorce. If you create a revocable trust during your marriage with marital property, however, the assets will be shared and divisible.
The key thing to note is that all assets placed into a trust must be treated and kept as separate property during your marriage. This means property that is solely yours – not shared with your spouse. None of the assets included in the trust should be commingled with your spouse or marital assets. Doing so will put them at risk of being classified as marital property and divided with your ex-spouse.
Protecting Your Heirs’ Assets
Trusts can also be used to protect assets from divorce that you plan on passing to your heirs. Establishing certain trusts ahead of time can prevent your estate from being shared with your ex-spouse or an ex-spouse’s heir. Consider creating a specialized trust to achieve this goal.
One possibility is a discretionary trust. This type of irrevocable trust allows you to designate an heir as a beneficiary and name someone else – other than the heir – as the trustee, who will have the power to disburse the inheritance. You can set aside assets for your chosen beneficiaries without giving them the power to decide when the assets are distributed.
Another option is a domestic asset protection trust. This type of irrevocable trust can protect assets meant for your heirs from creditors as well as divorce claims – including alimony or spousal maintenance orders. For this trust to be valid, it must have beneficiaries listed other than the settlor.
It is important to communicate to your heirs that their inheritances need to be kept separate from marital property in their own relationships to protect them from potential divorce. Preventing the commingling of an inheritance is crucial to protect the assets from division.
Use a Trust Attorney for Effective Asset Protection From Divorce
Trust laws in Missouri are complex. It is essential to consult with a knowledgeable trust attorney well in advance of your divorce to maximize the effectiveness of a trust’s asset protection. Acting sooner rather than later can make all the difference to the strength of your trusts.
TdD Attorneys at Law LLC offers free consultations regarding trusts, where we can offer experienced and personalized counsel at no cost. Contact us at (314) 628-8078 to schedule your meeting.