Divorce is rarely an enjoyable process, often posing unexpected and financially significant issues for spouses and their families. While no one enters a marriage with the goal of divorce, separation is sometimes inevitable. Through different legal estate planning tools, however, it is possible to ease the process of divorce and ensure financial stability. One of the most valuable tools at a person’s disposal is the trust, which can be used to protect assets and property across generations.
At Siedentopf Law, we work alongside our clients to create trusts that benefit themselves and their children after divorce. Through our comprehensive estate planning services, we advise individuals and families on the array of tools available to them and how to better utilize these tools to protect their wealth and property. It is never too soon to protect your assets. Consider calling Siedentopf Law today at (404) 736-6066 to learn more about how we can help you and your family.
What is a Trust?
A trust is a legal fiduciary arrangement that is used to protect assets and property. The person who establishes a trust, known as the grantor, creates a separate legal entity that is managed by another party, known as the trustee. The trustee is responsible for holding all of the assets and property contained within the trust until it is time to distribute the estate to a third party, known as the beneficiary. Essentially, a trust is a way to protect assets and property for the long-term.
To create a trust, a person will typically consult an attorney, who will then draft the legal document that will eventually represent the trust. This document is legally binding and sets forth precisely how assets and property will be held and distributed to beneficiaries. The grantor can select a second party, be it a person or a firm, to serve as the trustee, or can appoint themselves as the trustee. The trustee is tasked with holding and administering the estate when the time comes.
While there are many different types of trusts, they all fall into one of two categories, namely:
● Irrevocable trusts
● Revocable trusts
There are a variety of differences between these two categories of trusts, but the primary differentiating factor is the ability to change or amend the trust after it is created. When an irrevocable trust is established, it cannot be changed. This is contrary to a revocable trust, in which the grantor can change the terms of the trust, or revoke it entirely and remove all assets.
How is a Trust Impacted During a Divorce?
When it comes to property division, alimony, and child support payments, navigating financial trusts is highly complicated and legally complex. Whether or not trusts are subject to property division depends largely on the type of trust, the purpose of the trust, and when the trust was established.
Generally, if the trust was created before the marriage, the assets and property held within the trust are not considered part of the marital property. Rather, the trust would be considered separate property. Since Section 19-3-9 of the Georgia Codestates that any separate property belonging to a spouse shall remain separate property, a trust that is separate property will remain so during the divorce proceedings. Similarly, if a trust – whether revocable or irrevocable – was created during the marriage, then the assets and property held by the trust will likely be considered marital property. In Georgia, any marital property is subject to division, and this is true of trusts as well.
When Should I Create a Trust to Protect My Assets?
If you wish to keep specific assets and property separate from a future spouse, it is advised to create the trust before marriage. This way, you are able to safeguard these assets and ensure that they do not mix with your future spouse’s assets, which often happens during marriage. Trusts created before marriage are not at risk of blending with your future spouse’s financial affairs.
If you are already married, but still wish to protect your assets, all hope is not lost. It is possible to create a trust and fund it with assets that are not subject to property division. Inheritance or gifts, for example, are still considered separate property even if they were received during a marriage. Funding a trust with non-marital assets can help ensure that the trust is not divided during divorce.
It may be tempting to establish a trust to hide or shield assets from a spouse during a marriage. This strategy may seem like the best way to protect assets from division during a divorce. If a court believes that you are purposely trying to hide assets from a spouse, which is known as fraudulent conveyance, it has the ability to undo and dissolve the trust.
How Can a Trust Protect Your Family?
While a trust is limited in the protections it offers to you during a divorce, it should be noted that a trust can be greatly beneficial to your family in the long run. At Siedentopf Law, we often receive questions about how to protect assets from a potential divorce. A well structured trust can be used to provide divorce protection to any after-death beneficiaries. This means that any assets within the trust will not fall into the hands of an adult child’s ex-spouse.
This is a powerful tool for families who wish to protect their wealth and assets across generations. By creating a trust and naming a child as both the trustee and beneficiary, it is possible to ensure that your child remains in control of the assets. In this way, they can enjoy the benefits of their inheritance without worrying about it becoming marital property in their own marriage.
How Can Siedentopf Law Help?
Estate planning is legally complex, involving several moving pieces that work together to protect your family’s assets and property from falling into the wrong hands. Having a skilled estate planning attorney on your side, who understands your vision and your family’s legacy, is essential. At Siedentopf Law, we put your financial goals and objectives into practice through a variety of estate planning tools. If you are looking to protect the financial standing of you and your children after a divorce, or if you wish to add to your pre-existing estate plan, consider contacting us at (404) 736-6066 today.