Trust accounts and property division in divorces

Some Texans attempt to shelter their assets from potential divorces by setting up irrevocable trusts. While it is possible to do so, there are some mistakes that people can make that can make the trust reachable by their spouse in a divorce case.

A common scenario is when the parents of a person set up an irrevocable trust in their adult child's name but not in the name of the spouse. If assets are placed in a trust before the marriage, those assets will be considered to be the separate property of the person. If the person commingles the funds with marital property, the trust may be determined to be marital property and subject to division.

Another issue may exist if the spouse who will be the beneficiary of the trust has access to making withdrawals from it. This can then be used to determine whether or not that party should be eligible for alimony or whether he or she should be ordered to pay it. Generally, if the person cannot control the trust distributions, the trust will not be considered by the family court.

Marital property normally includes all of the property that either spouse obtained during their marriage. Property and assets they held before the marriage is normally considered to be separate property. When a trust is involved for the benefit of one spouse, the other is likely to try to argue that the assets held by it are marital instead of separate property. People who have a trust and who want a divorce may want to get advice from a family law attorney about how they might best proceed.

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