Divorce brings a cascade of changes. Among these is the question of how to handle assets that are part of a revocable living trust shared with a spouse. While an afterthought for many, it’s a common concern in estate planning. Which is why estate planning professionals know how to protect your interests in these assets during this transition.
When you’re going through a divorce and your assets are tied up in a joint revocable living trust, the first step is to talk to your divorce attorney. They will guide you on how to properly declare and divide these assets through the divorce process. Remember, this process is subject to the rulings of the divorce court, so it’s important to deal with each step before starting the next.
If you’re looking to make plans for assets in anticipation of the divorce, one approach is to list and define your personal interest in those assets. This process involves identifying and separating what’s yours from what’s jointly owned, often referred to as the “community property interest”. You can then create new documents, such as a will or a separate trust, to specifically address your share of these marital assets.
Creating New Estate Planning Documents
It’s usually advisable to create entirely new estate planning documents for yourself during this process. This could be a new will or a new trust designed to hold and protect your interests in these formerly joint assets. These new documents will ensure that if something unexpected happens to you before the divorce is finalized, your portion of the assets will be distributed according to your wishes.
These are the most common options available to protect interests in assets:
Creating a New Trust: You can establish a new trust to hold your interest in the original trust. This is a good way to clearly separate your assets from those shared with a spouse.
Amending the Current Trust: Another option is to amend the current trust to reflect your new circumstances. This can be a way to adjust the existing arrangement to better fit the developing or current situation.
Transferring Assets: You might also consider moving assets out of the trust and into your individual name to have more direct control over them.
Regardless of the method you choose, the key is to have clear, written instructions on what should happen to your share of the property if you pass away during the divorce process. This clarity ensures that your wishes are honored, and your assets are handled as intended.
If you’re unsure about how to handle your assets or need advice on modifying your estate plan, seeking legal help is always beneficial. An attorney can review your current trust, provide guidance on the best steps to take, and ensure your documents clearly state your intentions regarding your assets. How you handle your assets in a revocable living trust should be a key part of the resolution of a divorce.