If you’re going through a separation, you may have many questions about your future. A big change like this brings up confusion about everything from your finances to child care and property rights. At Viola Law Firm P.C., we work in family law and trusts, so we’re here to shed some light on a common topic our clients often ask about: How are trusts treated in a divorce?
If you need specific help with your estate, we recommend speaking with a family law attorney for more personalized guidance.
Are Trusts Protected in a Divorce?
In short, no. While trusts are often created to protect or separate assets, they are not automatically shielded during a divorce or family law dispute. Whether a trust is considered separate or subject to division can depend on several factors, including how it was funded, how the assets were used during the marriage, and the terms of the trust itself.
How Different Types of Trusts Are Treated in Family Law Matters in California
How a trust is treated in family law settlements often depends on its structure. Here are a few common types:
- Revocable living trusts: A revocable living trust can generally be changed or canceled by the person who created it. In family law proceedings, assets held in this type of trust may still be reviewed as part of marital property division, especially if the trust includes property acquired during the marriage.
- Joint trusts: Joint trusts are commonly created by married couples to hold shared assets. Because both spouses may contribute to or benefit from the trust, courts may examine whether the contents should be included in asset distribution.
- Separate trusts: A separate trust may be established by one spouse to hold individually owned property. Even so, the classification of those assets can become more complex if marital income, shared funds, or joint efforts contributed to the trust’s growth or maintenance over time.
In California, courts may look beyond the name or structure of a trust to evaluate how it was used during the marriage and whether the assets involved fall under community property laws. If a trust is specifically referenced in a marital settlement agreement, for example, the terms of that agreement can influence how related assets are handled moving forward. Courts may consider the language of the MSA when resolving later disputes involving ownership or administration.
When a trust is formed during the marriage and funded with assets obtained while the spouses were together, those assets may be treated as jointly owned under California law. Property placed into a trust before the marriage may remain separate in some circumstances. However, if shared funds or marital efforts later contributed to the trust’s value, a court may consider whether part of that increase should be included in the division process.
Do You Need Support With Divorce Estate Planning?
Navigating complexities like separate property claims, family law, and trusts requires careful planning. Whether you need help with trust asset distribution or preparing for deposition, Viola Law Firm P.C. is here to help. Call us at (650) 643-4212 to schedule a consultation.
