Do I have to share my trust fund in a divorce?
When you write a will or establish a trust, your goal is to make sure your property is distributed according to your wishes after your death. You want to avoid conflict, and you want to maximize the value passed on. It's that basic.
Or is it?
You may want to consider what happens to your assets after you die, too. For example, you may want to make sure your children are 25 before they have access to the large sums of money you will leave behind. You may want to make sure a painting donated to the Detroit Institute of Arts is returned to the family if the museum's collection is auctioned off to rescue the city from bankruptcy. Or, you may want to make sure your grandchildren will not be forced to share their trust assets with their no-good spouses, especially if they divorce.
A trust agreement can put any of these conditions into place. A trust agreement, in fact, can put just about any condition in place as long as it's legal. The trick is to think of all the ways your assets could fall into what you consider to be "the wrong hands."
The division of property in divorce is tricky in Michigan. What you want to consider is whether the trust should be considered individual property or marital property. If it is separate property, the money will stay with your heir. If it is marital property, it could be divided between your heir and the ex-spouse.
We'll explain more in our next post.
Source: Forbes, "What Divorcing Women Need To Know About Protecting Third-Party Trusts," Jeff Landers, Oct. 8, 2015