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When are trust assets left untouched in divorce?

You and your spouse will have to divide your assets equitably in your Michigan divorce, but there are some assets that may not be included in the process if they are in a trust. According to the American Bar Association, there are several circumstances where this may apply, and some where it will not.

If you are the beneficiary of an irrevocable trust that was set up before your marriage, the assets may be safe from division. Likewise, if you have assets that you inherited or that were yours before the divorce, you may be able to put them in a trust that is shielded from your spouse. However, if you do not have access to the assets themselves, and your income from the trust is limited, you should discuss how those limitations should be addressed. Otherwise, your portion of the marital property could be unfair based on your actual cash flow.

Many people create an irrevocable trust in order to benefit their children after they are gone. You and your spouse may want to keep such a trust intact and agree not to include it in the property division so that your child's future remains secure. 

Spouses cannot use a trust to hide or withhold marital assets during a divorce. In fact, if you transfer assets to a trust with the stipulation that the funds are not to be available to your spouse, and a judge deems it to be a fraudulent transfer, he or she could simply change the terms of the trust. 

Because there are many types of trusts and the rules differ for each based on a number of factors, this information should not replace the advice of an attorney.

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Lorrie J. Zahodnic

"I will hold you up until you can stand on your own two feet."

Lorrie J. Zahodnic, P.C. has provided skilled and compassionate legal guidance to Michiganders in family law matters for over 20 years.

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