On the other hand, in an irrevocable trust, beneficiaries could have more control over distributions, all based on the details of the trust holder`s authority over the power they have. However, in this scenario, if the beneficiary receives distributions or income from the trust, it is their responsibility. In this case, a former spouse can claim half of the income that the trust distributes to you as a beneficiary. When you form a living trust, you take the valuable personal property and transfer ownership of that items to another entity. This new entity is the trust, so it is the trust that owns the assets and not you. The assets of the trust are not subject to an estate, increased tax liability and, in this case, claims by an ex-spouse during the divorce proceedings. Your ex-spouse has already been married to you, not the trust. A claim against your trust`s property is like an ex-spouse claiming half of your neighbor`s property during your divorce. The advantage of a trust is that the property does not belong to the beneficiary spouse and never becomes matrimonial property, even if it is used to purchase property used by both parties. For example, the trust could buy a house where the couple can live and pay for their expenses. Provided that the house remains in the trust and no matrimonial funds are used for the purchase, mortgage payment or maintenance of the house, the non-beneficiary spouse is not entitled to an equitable distribution of the house. Ownership of the house belongs to the trust, not to the other spouse. Today, I`m going to talk about marriage contracts and asset protection plans.
When you should use each of them, and I`ll tell you why I prefer asset protection plans to prenuptial agreements. The main difference between these two is that in a revocable trust, as a trust owner, you can make changes and additions to it, whereas an irrevocable trust does not allow the owner of the trust to do so. It should be noted that revocable trusts become irrevocable once the trust holder dies or suffers from a disability that prevents them from making critical decisions. As an alternative to a trust, separate assets can also be protected in a matrimonial or post-marital contract. These are used to help couples resolve financial problems that may arise during their marriage and in the event of divorce, separation or death, although with regard to death, a will must be made to fulfill the agreements set out in the prenup or post-nup in this regard. Prenups and post-nups are often used to protect separate assets. One of the advantages of these documents is that they allow parties to indicate what income, assets and liabilities will be “separate” without having to worry about restricting access to money in a trust fund. Entrepreneurs benefit the most from setting up a trust for their business. On the contrary, business owners are also most at risk if they don`t have a plan to protect what they`ve acquired throughout their business careers.
Without proper planning, business assets can be at risk during a divorce. There are many good reasons to want a marriage contract. They avoid fighting at the end of the marriage and show that marriage is more than just about money. Our clients include those who have already experienced a failed marriage, who have important assets, who marry young, who marry on a whim or who choose younger partners or from abroad. In each of these cases, it is advisable to protect yourself. If you are getting married or are already married and want to protect your separate property with a trust or prenuptial agreement, talk to a lawyer about the best option for you. Please contact us to find out how we can help you. Another important issue is that when income from a trust is transferred to a joint account, used to purchase matrimonial property, or used to pay for ordinary marriage expenses, these amounts are no longer segregated and become matrimonial property, subject to equitable distribution with one exception. Separate real estate contributions used as a down payment on or for capital improvements to an asset, such as real property.
B, retain their character as separate ownership, provided that documents are in place to track this contribution. This is a different situation from the one mentioned above because the trust owned the house there. Any funds remaining in the trust or in a segregated account will continue to be separately owned by the beneficiary spouse. If you are preparing to tie the knot and want to make sure that the assets you bring into the marriage are not lost in a future divorce settlement or are protected for your children from a previous marriage, contact us as the family`s personal lawyer® for reliable advice and advice on all your options well in advance of your marriage. Once you`re married, many planning options are off the table. The disadvantage of a prenup or post-nup is that both parties must be involved in negotiating what will be a separate property. This can lead to conflict or clumsiness. Sometimes one or both parties may feel uncomfortable addressing or negotiating these issues, and they do not address all the issues that should be discussed. In a trust, the non-beneficiary spouse is not consulted.
You can also use a revocable living trust to support your surviving spouse and children from a previous marriage in the event of death or incapacity for work. Unlike a will, assets held by a trust are not subject to the legal process known as estate, so these assets are immediately available to your spouse and children, saving your family time, costs, and potential estate conflicts. Michigan law specifically states that any property transferred to a DAPT at least thirty (30 days) before a trustee`s marriage is excluded from matrimonial property. .