Asset Protection

Protecting trust assets from a beneficiary’s divorce.

Q: Is a trust I leave my child protected from their divorce?

Generally yes, if it's drafted and administered properly — with discretionary distributions, a spendthrift clause, and ideally an independent trustee. Protection can be lost if the child commingles trust assets with marital property or has so much control that a court treats the trust as personal property. Careful drafting and keeping trust assets separate are what keep inherited wealth out of a divorcing spouse's reach.

You set up a trust to protect your children. But a poorly structured trust, or one your child treats carelessly, can be pulled into that child’s divorce. Careful drafting prevents it.

By Tresp, Day & Associates · February 26, 2021

The short version Assets left to a child in trust are generally protected from that child’s divorce, if the trust is drafted and administered properly. Vulnerabilities creep in when a beneficiary commingles trust assets with marital property, treats the trust as a personal account, or when the trust gives the beneficiary too much control. Proper drafting (discretionary distributions, a spendthrift clause, an independent trustee) keeps inherited wealth out of a divorcing spouse’s reach.

One of the strongest reasons to leave an inheritance in trust rather than outright is protection from a child’s future divorce. But that protection isn’t automatic, how the trust is written, and how the beneficiary treats it, determine whether it holds.

Where trusts become vulnerable

Trouble arises when a beneficiary commingles trust distributions with marital assets (buying a jointly-titled home with trust money, for example), when the beneficiary has so much control that a court treats the trust as their personal property, or when distributions are so regular that a divorcing spouse can claim reliance on them. Sloppy administration can undo good intentions.

How to keep the protection strong

Drafting and habits that protect

Discretionary distributions, the trustee decides on distributions rather than a fixed entitlement
A spendthrift clause, barring creditors (including a divorcing spouse) from reaching trust assets
An independent trustee, rather than the beneficiary controlling everything
Keep it separate, beneficiaries should never commingle trust assets with marital property

Plan it right the first time

These protections are far easier to build in at the drafting stage than to fix later. Tresp, Day & Associates structures inheritance trusts so the wealth you pass on stays protected for the child you intended, part of coordinated estate and asset-protection planning.

Ready to protect what is yours?

Since 1992, Tresp, Day & Associates has structured asset protection for families and businesses nationwide. Request a consultation or call (858) 755-6672.

Common questions

Frequently asked

Is a trust I leave my child protected from their divorce?

Generally yes, if it's drafted and administered properly, with discretionary distributions, a spendthrift clause, and ideally an independent trustee. Protection can be lost if the child commingles trust assets with marital property or has so much control that a court treats the trust as personal property. Careful drafting and keeping trust assets separate are what keep inherited wealth out of a divorcing spouse's reach.

This article is general information, not legal or tax advice, and does not create an attorney-client relationship?

This article is general information, not legal or tax advice, and does not create an attorney-client relationship. Every situation is different and the law changes; consult a qualified attorney about your circumstances.

This website is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Every situation is different; please consult a qualified attorney about your specific circumstances.

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