Does Your Spouse Have a Right to Your Trust Income?
If you receive income from a trust fund, you probably don’t want to share it with your spouse after your divorce. Fortunately, if you have lived in New York long enough to file for divorce here, your trust fund is probably safe. However, under limited circumstances, your ex might have a claim to support from your trust fund.
The first question to ask is whether your trust income is property and, if so, whether it’s separate property. If your income comes from a revocable trust, the grantor has the power to change the terms of the trust at any time, including naming a new beneficiary. Therefore, you don’t have a property interest in the trust funds because you have no control over whether you continue to receive income. Similarly, if your trust income is subject to conditions or up to the discretion of a trustee, you have no property interest because you cannot demand payment notwithstanding the trustee’s decision. However, if the trust is irrevocable and you have an enforceable income interest, the court may consider the trust property.
Whether the trust is separate property depends on factors such as when it was created, who funded it, and where the funds came from. For the court to treat the trust as marital property, making it subject to equitable distribution, there would have to be evidence that at least one of the spouses created the trust with marital assets.
Perhaps the only situation you have to worry about in New York is where you anticipate paying or receiving alimony or paying child support. The court considers your trust income along with your other earnings. If you’re in a position to pay spousal support or child support, you can anticipate paying your ex just a little bit more out of your trust income.
If you have questions about trust income following divorce, let Bryan L. Salamone & Associates, P.C. provide you with reliable and timely legal advice. As the largest and busiest divorce and family law firm on Long Island, we are prepared to represent you capably and aggressively.