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Establishing a Trust before Saying "I Do"

Those considering marriage should also think about establishing a trust prior to their wedding date. No, not the "I know my future spouse will be loyal and honest" kind of trust - a financial trust.

Financial trusts are not just for end of life planning anymore. This form of financial protection is increasing in popularity because a trust can provide a number of different protections, particularly during both marriage and divorce.

As the average age of marriage increases, many people find themselves already established professionally before walking down the aisle. This can mean they already own a business or have a strong financial portfolio of their own.

Although we all hope a happy wedding day translates into a happy marriage, it is wise to take some steps to ensure that the financial foundation you worked so hard to establish is solid...even if the marriage becomes shaky.

The Basics of How a Financial Trust Works in Divorce

Whether you are attempting to proactively protect your assets prior to a marriage or you are already married and concerned about how an impending divorce may impact your finances, it's important to understand how a trust works.

For the most part, a trust established prior to a marriage is considered separate property. As a result, it is often not taken into account during the property division determinations of a divorce.

Not all trusts fall into this category, and even those that do can still fall under the scrutiny of the court. Two common issues surrounding a trust are whether the spouse was a co-trustee and if the trust provided distributions designed to maintain the spouse's lifestyle. These two issues can lead to questions of whether the trust should be considered as an asset in property division calculations.

The answer to these and other issues involving trusts during divorce often turn on the exact wording of the trust. As a result, it is important to discuss your situation with an experienced property division attorney before creating one or attempting to enforce one.

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