 |
Irrevocable Trust Divorce
My spouse (husband) is placing all assets
(rental properties, real estate, cars)
into an irrevocable trust.
How do Community States affect the irrevocable trust?
Trust law depends on many factors and there are a myriad of regulations and laws concerning their outcome. The irrevocable trust the husband wishes to create does not ensure that all irrevocable trusts are equal and the same. What I mean when I state that not all irrevocable trusts are the same is that there are no standards for quality of an irrevocable trust. An irrevocable trust written by an amateur (one written by someone with little experience) is not the same as one written by an expert whose irrevocable trusts have been time tested and endured the judicial scrutiny – even though BOTH are called irrevocable trusts. When purchasing an irrevocable trust you are not buying the trust by itself, you are buying the knowledge and expertise of the writer being able to anticipate landmines that will invariably arise.
Since irrevocable trusts are complicated a review of the trust needs to be completed before a legitimate answer can be made for the husband who wishes to create an irrevocable trust. One of the major factors when setting up a trust is where one resides and where the property is located (i.e. in what state).
Community State and Irrevocable Trusts
For instance, California is a community state and, thus, the title of the property is deemed to be owned by both spouses despite who purchased the home or real estate until the spouses divorce or separate. The governing laws regarding the entitlement holdings of the Community property is largely determined by the Community state in which the husband and wife are living in during their marriage. Most Community states will deem a community property as jointly held when either spouse has purchased the property and they are domiciled in that Community state. There are some exceptions to this general Community property rule and each state needs to be examined separately. The exceptions to this jointly held ruling on Community property is as follows:
- When a property is acquired by a spouse via gift or inheritance.
- Property acquired by separate property of one of the spouses which is outside one of the Community states. For example, rents on separate investment of properties.
- Property acquired by a legal entity such as the following:
-
- Trust
- Corporation
- Partnership
- LLC (Limited Liability Company
The Community states are as follows:
- Arizona
- California
- Idaho
- Louisiana
- Nevada
Fraudulent Conveyance with gifted assets transferred and asset transferred less than four years
Another critical question to ask is how will the assets be transferred to the irrevocable trust. The husband could be in danger of fraudulent conveyance if the assets were transferred by gifting and the irrevocable trust could be annuled by a judge, by the wife or even a creditor. Fraudulent conveyance could be charged especially if the transfer was done less than four years ago. The stature of limitation on transfer of assets is four years in most states, but there are a handful of cases of a California judge ruling that revoked an irrevocable trust as far back as eight years!
Grantor and wife's beneficiary benefits to assets
One of the questions the wife should ask is if she will be a beneficiary of the irrevocable trust. If the grantor does not revoke the wife's beneficiary privileges then she will have access to the assets. As a general rule, the grantor will have the right to change the beneficiary benefits to the assets. However, the irrevocable trust is regarded as one of the best and most powerful ways to protect one's assets - provided the irrevocable trust is set up with all the precautions in place. Please read Not all irrevocable trusts are the same. Because of the nature of the irrevocable trust, if the wife's name is not written in the trust then it will be very difficult or near impossible to have access to any of the assets.
Rocco Beatrice, CPA, MST, MBA, Managing Director, Estate Street Partners, LLC.
Mr. Beatrice is an asset protection award winning trust and estate planning expert.
Read more articles on irrevocable trust asset protection:
- Irrevocable Trust Tax Benefits
- Irrevocable Trust Benefits
- Ultra Trust® Irrevocable Trust
- Irrevocable Trust Divorce
- Irrevocable Trust Agreement
Read articles on irrevocable trusts and senior elder care visit:
- Medicare: elder care
- Asset Protection from Medicaid
- Hide My Assets Medicare
- Protect Assets Nursing Home Costs
- Nursing Home Spend-down Program
- Medicaid Estate Planning
Managing Director, Estate Street Partners, LLC
Mr. Beatrice is an asset protection, award-winning trust and estate planning expert.
Estate Street Partners, LLC
Uncompromising, Alternative and Exclusive Estate Planning & Wealth Management for an Accelerated Chartered Roadmap to Financial Success
71 Commercial Street #150, Boston, MA 02109
toll-free: 888-93-ULTRA (888-938-5872)
tel: +1.508.429.0011 fax: +1.508.429.3034
Only by appointment: 2235 E. Flamingo Road, Suite 201-G, Las Vegas NV 89119
toll-free: 888-93ULTRA (888-938-5872)
tel: 702.615.7616 fax: 702.796.6694
