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Diamond & Diamond, P.A.
NJ FAMILY LAW ATTORNEYS

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IN DIVORCE AND FAMILY LAW
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Diamond & Diamond, P.A.
NJ FAMILY LAW ATTORNEYS

HIGH-QUALITY REPRESENTATION
IN DIVORCE AND FAMILY LAW
MATTERS

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Will a divorce court divide my trust?

| Sep 4, 2020 | Family Law |

Many people dread divorce court because it divides up many of their assets. If you are going through a divorce and you have any property that is separate property, it should be safe from any claims by your spouse. You might also wonder if a trust set up by your family for you will also remain safe. 

There are good reasons to believe your spouse cannot touch your trust money. If you are not the trustee and do not own the trust, then the money is not actually yours and should not count as any kind of marital property. Still, under some circumstances your spouse might have a valid claim to a share of your trust. 

Trusts with vague terms and conditions

Forbes explains that when you set up a trust, you create terms that govern how to disperse the money contained in the trust. You name the person who will receive the money from the trust. You might also dictate how much your beneficiary will receive, if your trust will pay out in intervals, and if your beneficiary must meet any standards to receive the money. 

Unfortunately, some people are not very specific when composing a trust. If you are a trust beneficiary, you want the trust to be clear that you are the beneficiary and that the money has no connection to your marriage. However, if the trust terms are too vague and open to interpretation, your spouse might get a judge to interpret the trust as some form of marital property. 

Trusts with illegal or impractical provisions

A trust should also comply with the laws of the state. If a judge finds your trust contains illegal provisions or violates the public policy of the state, it might give the judge an excuse to dissolve the trust and open up the money to division. In addition, judges may dissolve trusts if their terms are impractical or impossible to fulfill. 

There is no guarantee that a judge will not split off some of your trust money or at least count that money towards alimony. However, a trust that complies with state law and clearly designates the trust money as separate property may stand a good chance of withstanding court challenges from your spouse.