How Can I Protect My Children’s Trusts From Divorce in New York?

In order to protect certain assets and wealth throughout generations, many families use trusts. This allows a trustee to manage and take care of assets on behalf of a beneficiary until they can inherit them. However, common provisions for trusts may not provide protection to this inheritance in the event that the beneficiary goes through a divorce. When a person divorces their spouse, their assets are subject to equitable distribution. This can result in the loss of certain assets. In order to prevent the loss of an inheritance, there are certain provisions that can be put in place to protect them. Continue reading below to learn more and contact a New York estate planning attorney for assistance.

Should Distributions be Certain?

When creating an estate plan, certainty may seem like a positive thing. However, it can have unintended consequences when dealing with trust provisions for beneficiary distributions. If it appears a beneficiary is certain to receive distributions from a trust, there is a greater chance a judge will consider dividing these assets during a divorce. It is because of this that it is important to use specific phrasing that reduces the risks of making distributions look like they can be expected, rather than guaranteed. Instead of using phrases such as “shall distribute” or “will be made,” the word “may” can be beneficial instead.

Naming Multiple Beneficiaries

Another strategy that is used to protect assets within a trust from being divided in a divorce is by naming multiple beneficiaries. This can include beneficiaries that are in subsequent generations. Doing so demonstrates that the assets are meant to benefit more than one individual, which is why they should not be given away in a divorce.

Consider Alternatives to Direct Distributions

It is often easier to convince the court that assets left in a trust and managed by a trustee should be left out of a divorce. This also ensures the beneficiary can benefit from the protections of the trusts. There are some cases in which a trust is written to be distributed at a certain point in a person’s life, such as a specific age or after they get married. However, once this money is distributed, it is no longer protected. Instead of directly distributing funds from the trust, the trustee can make payments on behalf of the beneficiary so it can stay protected.

Contact our Firm

If you or a loved one needs assistance creating an estate plan and wish to speak with an experienced attorney, contact the Law Office of Andres D. Gil, PLLC today.

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