With divorces becoming more common, many California individuals, especially business people, have begun to establish trusts to protect certain assets in case of a divorce. Trusts aren’t considered to be as ironclad as prenuptial agreements, but they can help individuals to protect certain assets from becoming the property of exes, unintended beneficiaries or creditors. Although a trust doesn’t guarantee that a person won’t have to give half or a portion of the assets to his ex, it can help him to have a better chance of not having to divide certain parts of his property, such as stock in a company.
A number of different states, including California, have established laws that allow people to develop trusts before they get married. The laws are meant to help people who developed businesses or earned money before they got married. If an individual ends up getting a divorce, he or she likely will end up having to split money and property will his or her ex and possibly pay alimony or child support. If exes try to go for a portion of trusts, they often have to pay taxes associated with the trusts.
In California, certain assets, businesses or monetary gifts established as trusts don’t automatically become jointly owned when people get married. A person who establishes the trust can determine who becomes the beneficiary of the trust and how the money is distributed to them. If someone has been married and divorced multiple times, they can protect their trust by designating their children as beneficiaries. A trust can often be set up either years or a little over a month before an individual gets married.
Establishing a trust can be a complicated procedure. Many individuals get assistance from attorneys to help them to develop protected trusts before they get married for the first time. If they end up getting divorced, they can often argue successfully to keep their trusts if they agree to other terms of property division. In any high asset divorce, couples have to come to property division settlements. Working with ex-husbands or wives to find a compromise can help people to have a better chance of retaining certain property, such as trusts or other assets, after the divorce settlement.
Source: Barron’s, “Divorce Trusts“, Tatiana Serafin, May 18, 2013