What Happens to a Living Trust in a Divorce?
Many people believe that placing assets in a trust means those assets are untouchable in a divorce. That is often wrong. Whether your trust assets are protected depends on the type of trust, when it was funded, where you live, and how the assets were originally acquired. Here is what you need to know before assuming your trust is safe.
The biggest mistake people make
Assuming that “it's in a trust” means it is protected from divorce. In reality, revocable living trusts offer virtually no protection because you retain full control over the assets. Courts look past the trust structure and treat those assets the same as if you held them individually. Only certain irrevocable trusts — under specific conditions — may shield assets from division.
Revocable vs Irrevocable Trusts: Why It Matters
The type of trust you have fundamentally determines how a divorce court will treat the assets inside it.
Revocable living trusts
A revocable trust can be amended, changed, or dissolved at any time by the grantor. Because you retain full control, courts in virtually every state treat revocable trust assets as your property for divorce purposes. If you funded a revocable trust with marital earnings or marital property, those assets are subject to division just like a regular bank account. A joint revocable trust created by both spouses will typically be dissolved or restructured as part of the divorce settlement.
Irrevocable trusts
An irrevocable trust generally cannot be modified or revoked once created. Because the grantor gives up control of the assets, courts may treat them as outside the marital estate. However, protection is not guaranteed. If a court finds that the trust was funded with marital assets, created to defraud the other spouse, or that the grantor retained too much practical control, it may “pierce” the trust and include those assets in the division. Courts in several states have done exactly this when they determined the trust was used as an asset-protection vehicle rather than a genuine estate planning tool.
Third-party trusts
If a trust was created by someone else — such as a parent or grandparent — for your benefit, those assets are generally considered separate property and are harder for a spouse to claim. However, if distributions from the trust were deposited into a joint account or commingled with marital funds, a court may treat some portion as marital property.
Community Property vs Equitable Distribution States
Where you live determines the framework courts use to divide assets — including trust assets.
Community property states (AZ, CA, ID, LA, NV, NM, TX, WA, WI)
In these nine states, most assets acquired during the marriage are presumed to be community property, owned 50/50 by both spouses. If you funded a trust during the marriage using income you earned, those assets are community property regardless of the trust structure. The trust itself does not change the character of the property. Separate property — such as an inheritance placed in a trust before marriage — remains separate as long as it was never commingled with marital funds.
Equitable distribution states (all other states + DC)
In equitable distribution states, courts divide property based on what is fair, not necessarily equal. Factors include each spouse's income, the length of the marriage, contributions to the marriage (including homemaking), and each spouse's financial needs. Trust assets may be treated differently depending on when the trust was created, who funded it, whether marital funds were used, and the intent behind the trust. Courts have more discretion here, which means outcomes are less predictable.
When Was the Trust Funded? Timing Is Everything
The date assets were placed into the trust is one of the most important factors in determining whether they are marital or separate property.
Trust funded before marriage with separate property
Assets that were yours before the marriage and placed into a trust before the marriage are generally separate property. This is the strongest position for keeping trust assets out of the divorce. However, if the trust generated income during the marriage and that income was commingled with marital funds, the appreciation or income may become marital property in some states.
Trust funded during marriage with marital income
If you earned money during the marriage and placed it into a trust, those assets are almost certainly marital property. The trust wrapper does not convert marital property into separate property. Courts will look through the trust to the source of the funds.
Inherited assets placed in trust
Inheritances are generally separate property in most states, even if received during the marriage. If you inherited assets and placed them into a trust without commingling them with marital funds, they typically remain separate. The key is keeping them completely segregated — do not deposit them into a joint account, even temporarily.
Trust funded with a mix of separate and marital assets
This is the most complicated scenario and unfortunately one of the most common. When separate and marital assets are commingled in a trust, tracing becomes necessary. A forensic accountant may need to track every dollar to determine what portion is marital. In some states, once separate property is commingled, the entire amount may be presumed marital unless you can prove otherwise.
Can Your Spouse Access Trust Assets During Divorce?
The short answer is: it depends on the trust type and your state's laws. Here is how it typically works:
Discovery and disclosure
During divorce, both spouses are required to disclose all assets, including trust interests. Your spouse's attorney can subpoena trust documents, demand an accounting of trust assets, and depose the trustee. You cannot hide assets in a trust to avoid disclosure — doing so is considered fraud and courts punish it severely.
Revocable trust assets
Since you control a revocable trust, courts treat those assets as available to you. Your spouse can argue for a share of any marital property held in the trust. Automatic temporary restraining orders (ATROs) issued at the start of divorce proceedings typically prevent either spouse from transferring, hiding, or dissipating trust assets.
Irrevocable trust assets
If you are a beneficiary of an irrevocable trust but not the trustee, your spouse generally cannot access the trust principal directly. However, courts may consider trust distributions you receive as income for purposes of calculating alimony or child support. In some states, courts can even order the trustee to make distributions to satisfy a divorce judgment.
Spendthrift provisions
Some trusts include spendthrift clauses that prevent beneficiaries' creditors from reaching trust assets. Whether a divorce court is considered a “creditor” varies by state. In many jurisdictions, spendthrift provisions do not protect trust assets from division in a divorce, especially for obligations like child support and alimony.
Steps to Protect Your Trust During Divorce
If divorce is on the horizon, take these steps to protect your trust assets as much as legally possible:
Freeze all trust amendments immediately
Do not make any changes to the trust without consulting your attorney. Modifications made during or shortly before divorce can look like an attempt to hide assets and will draw scrutiny from the court.
Notify the trustee in writing
If someone else serves as trustee, send them written notice that divorce proceedings are pending. Instruct them not to make distributions or changes without court approval or mutual consent from both spouses.
Gather and secure all trust documents
Collect the original trust agreement, all amendments, schedules of assets, statements from trust accounts, and records of every contribution and distribution. Your attorney will need these, and they will be requested during discovery.
Document the source of every trust asset
For each asset in the trust, trace where the money came from. Was it a pre-marriage inheritance? Earnings during the marriage? A gift from your parents? This documentation is critical for proving whether assets are separate or marital.
Do not commingle trust and marital funds
If you have not already done so, make sure trust accounts are completely separate from any joint or marital accounts. Even small deposits of marital money into a trust account can taint the entire account as marital in some jurisdictions.
Consult both a divorce attorney and a trust attorney
Trust law and divorce law are separate specialties. You may need an attorney who understands both, or two attorneys working together. An estate planning attorney can advise on trust structure, while a family law attorney handles the divorce strategy.
Modifying Your Trust After Divorce
Once the divorce is finalized, updating your trust is one of the most important — and most overlooked — steps. Failing to do this can leave your ex-spouse in control of your assets or named as a beneficiary.
Critical trust updates after divorce:
- ✓Remove your ex-spouse as beneficiary — Unlike wills in some states, trusts are generally not subject to automatic revocation-upon-divorce laws. If your ex is named as a beneficiary, they may still inherit unless you explicitly remove them.
- ✓Remove your ex-spouse as trustee or successor trustee — If your ex-spouse was named to manage the trust if you become incapacitated or pass away, replace them with someone you trust now. This is especially critical if you have children and the trust holds assets for their benefit.
- ✓Update distribution provisions — Review who receives what and when. You may want to add new beneficiaries, change the percentage splits, or add conditions such as age requirements for children to receive distributions.
- ✓Re-title assets if needed — If assets were held in a joint trust, they may need to be re-titled into your individual trust. Real estate deeds, vehicle titles, and financial accounts all need to reflect the correct trust name.
- ✓Coordinate with your will and other estate documents — Your trust, will, beneficiary designations, and powers of attorney should all be updated together to ensure consistency. A trust that names your children but a life insurance policy that still names your ex creates a conflict.
Common Mistakes People Make With Trusts and Divorce
Assuming a trust automatically protects assets from divorce
Reality: Revocable trusts offer zero protection. Even irrevocable trusts can be challenged if they were funded with marital assets or created to defraud a spouse. The trust structure alone does not determine protection.
Creating a trust right before or during divorce to hide assets
Reality: Courts look at the timing of trust creation very carefully. A trust established shortly before filing for divorce is a red flag. Judges can void fraudulent transfers, hold the creator in contempt, and award a larger share of assets to the other spouse.
Failing to disclose trust assets during divorce proceedings
Reality: All assets, including trust interests, must be disclosed. Hiding trust assets is treated as fraud. Courts have broad powers to penalize non-disclosure, including awarding the hidden assets entirely to the other spouse.
Commingling separate trust assets with marital funds
Reality: Depositing even a small amount of marital money into a trust that holds separate assets can turn the entire account into marital property in some jurisdictions. Once commingled, the burden of proof shifts to you to trace which funds were separate.
Not updating the trust after the divorce is final
Reality: Unlike wills, most states do not automatically revoke trust provisions that benefit an ex-spouse after divorce. If you do not update your trust, your ex could inherit assets or serve as trustee of assets meant for your children.
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Legal Disclaimer: This article is for informational purposes only and does not constitute legal, financial, or tax advice. Trust and estate laws vary significantly by state, and the treatment of trust assets in divorce depends on your specific circumstances, your state's laws, and the terms of your trust documents. Always consult with a licensed attorney who specializes in both family law and estate planning before making any decisions about your trust during or after divorce.
The information above provides general guidance applicable in most US jurisdictions. Your specific rights, restrictions, and options depend on your state's property division laws, your divorce decree, and the terms of your trust agreement. This content does not create an attorney-client relationship.