Revocable Trusts, Divorce, and Your Estate Plan
Setting up a revocable trust is one of the most convenient and most flexible ways that you can keep your assets out of probate. If you and your spouse set up a revocable trust, then you can use as much of the money as you need for yourselves and even pay some of it to beneficiaries while you are alive. After you are gone, the money in the revocable trust is not visible to the probate court as part of your estate. Probate is not the only situation in which the court ogles every penny of a couple’s assets and debts, though. Divorce also involves a thorough accounting of everything you own and everything you owe; as in probate, the court can also go against your wishes about how the money should be used in certain cases. A Central Florida estate planning lawyer can help you make the right decisions about your revocable trust if you or one of the beneficiaries of the trust is going through a divorce.
How to Stop a Late in Life Divorce from Ruining Your Estate Plan
From a legal perspective, the assets that you transfer to a revocable trust still belong to you while you are alive, but they do not belong to your estate after you die. Florida law treats revocable trusts similarly to how it treats businesses. If you own a company, then your share of ownership of it figures into the calculation of your net worth. When you get divorced, you must submit financial disclosures about everything you own, including assets that you have placed in a revocable trust, and the court will use this information as a basis for its decisions about equitable distribution and, if applicable, alimony. If you and your spouse set up a revocable trust together but later get divorced, you will need the help of an estate planning lawyer to sort out the matter of how to divide the assets in the trust.
If you inherited money, including receiving money from a revocable trust set up by your parents or other relatives while the settlor of the trust is still living, that money is nonmarital property, which means that it belongs to you alone and the court cannot make you share it with your spouse if you divorce. A big caveat, though, is that using the money as if it were marital property will turn it into marital property, and the court may make you give some of it to your ex-spouse. For example, if you use the trust money to buy a house with your spouse or deposit it into your joint bank account, it becomes marital property. The safest thing to do with trust money you get from your relatives is to keep it in a separate bank account that is your name alone.
Contact an Attorney Today for Help
A Tampa estate planning lawyer can help you mitigate the financial damage you suffer if your spouse decides to divorce you late in life. Contact David Toback for help today.