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A trust can be used to protect assets in a Missouri divorce

By the time a couple files for a divorce in Missouri, it is often too late to take steps to protect either one's assets before the property division is made. So before a couple gets married, it is important to think about how they want to handle property and financial interests.

Since many people now wait until they are older before they marry, they are likely to have acquired substantial assets before the wedding. Other couples who were previously married with children may want to protect the assets they brought from the first marriage and eventually give them to their kids.

One good way to protect those assets is to establish a trust and place those assets in the trust before the new marriage. A domestic asset protection trust is designed to protect one's assets from creditors, including former spouses if a divorce takes place. These trusts are called "self-settled" trusts because the people who create such a trust are able to name themselves as beneficiaries.

For example, if a woman has her own business before she is married, she can establish a trust and transfer ownership of the business into the trust, naming herself as a beneficiary. That way, if she marries and then divorces, it is likely the business will not be considered as property in the divorce because the trust will own the company.

A trustee -- usually another person or a bank -- manages the trust assets for the benefit of the named beneficiary. The trustee is required to account for his or her actions and to deal fairly with the trust and the beneficiaries. In addition, the beneficiary may be paid from the trust during the marriage. Whether those payments will be considered marital income in a divorce may depend on whether the beneficiary could legally enforce the payments or whether they are discretionary for the trustee.

If you would like to learn about the protection of assets in a divorce, please visit our O'Fallon marital property site. Our firm handles issues such as the ones discussed here.

Source: Forbes, "Can a Trust Protect My Assets in Divorce?" Jeff Landers, July 18, 2012

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Joseph J. Porzenski
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