When Does a Spouse Have Rights to a Revocable Trust?
For numerous reasons, individuals or couples may choose to place property in revocable trusts. These trusts hold the property during the grantor’s lifetime and then pass that wealth onto heirs when the grantor dies. When a trust is revocable, the grantor can change the terms, including the named beneficiary, at any time. The question for couples going through a divorce is whether a grantor spouse can amend the trust to remove the other spouse as beneficiary. The answer depends on the original terms of the trust, the timing of its formation, and the source of the assets that funded the trust.
If both spouses are named as grantors, the court will operate under the presumption that the trust funds are marital property and should be divided equitably. But if only one spouse established the trust, it is possible that the trust is separate property, and the grantor spouse might be free to amend its terms.
However, the signature on the trust might simply be a formality. What’s more important is when the trust was established and where the funds came from. If a grantor formed the trust before the marriage and only added the spouse as beneficiary in consideration of marriage or after the wedding, the court could treat the trust and its funds as separate property. If the grantor formed the trust during the marriage, he or she would have to show that only separate property funded the trust. If the grantor used joint assets at any time to fund the trust, the court will consider it marital property and divide it equitably.
Finally, the court can use trust income as a factor in determining child support and alimony.
If you have questions about your rights to a revocable trust your spouse created, trust Bryan L. Salamone & Associates, P.C. to come up with the right answers and to represent your interests aggressively.