Trusts and High-Asset Divorces in Florida: What You Need to Know

Trusts and High-Asset Divorces in Florida: What You Need to Know

In high-asset divorces, trusts often play a central role in the division of property. Trusts can be used to protect assets, preserve family wealth, or manage distributions, but they also add complexity to divorce proceedings. For individuals in Florida navigating a high-asset divorce, understanding how trusts are treated under state law is essential. This article explores the impact of trusts on asset division and provides strategies for addressing them effectively.

Types of Trusts Common in High-Asset Divorces

Trusts come in many forms, each with unique implications during divorce proceedings. The most common types include:

• Revocable Trusts: These trusts can be altered or revoked by the grantor during their lifetime. Assets held in a revocable trust are often considered marital property if acquired during the marriage.
• Irrevocable Trusts: These trusts cannot be changed or revoked once established. Irrevocable trusts are generally more difficult to include in marital property but may still be scrutinized in court.
• Domestic Asset Protection Trusts (DAPTs): Created to shield assets from creditors and claims, DAPTs may come under scrutiny if established to avoid equitable distribution.
• Spendthrift Trusts: Designed to protect beneficiaries from creditors or poor financial decisions, these trusts limit direct access to assets, complicating their treatment in divorce.

Are Trust Assets Considered Marital Property?

In Florida, whether trust assets are considered marital property depends on several factors:

• Timing: Assets placed in a trust before the marriage are typically considered non-marital property. However, income generated during the marriage or contributions made with marital funds may be subject to division.
• Source of Funds: If marital funds were used to create or fund the trust, the court might consider the assets marital property.
• Beneficiary Access: Courts may examine how accessible the trust assets are to the beneficiary spouse. For example, if a spouse relies on trust income to maintain their standard of living, it could be factored into alimony or property division.

Challenges with Trusts in High-Asset Divorces

1. Tracing and Valuing Trust Assets

Determining whether trust assets are marital or non-marital often requires tracing their origins and valuing their current worth. This can involve:

• Reviewing trust documents to understand terms and conditions.
• Analyzing financial records to trace contributions and distributions.
• Engaging forensic accountants or trust experts to assess value.

2. Hidden Assets

Trusts can be used to hide assets during a divorce. Identifying undisclosed trusts requires:

• Comprehensive discovery requests.
• Subpoenas for trust documentation.
• Investigating financial transactions for irregularities.

3. Jurisdictional Issues

Some trusts are established in states or countries with laws designed to protect them from legal claims. Overcoming these jurisdictional barriers can be challenging and may require specialized legal expertise.

Trusts and Alimony Considerations

While trust assets may not always be divisible, they can still influence alimony determinations. Florida courts consider the financial resources of both parties when awarding spousal support, and trust income or distributions may impact:

• Temporary Alimony: During the divorce process.
• Bridge-the-Gap Alimony: For short-term financial support.
• Rehabilitative Alimony: To assist a spouse in becoming self-sufficient.
• Permanent Alimony: For long-term support based on the recipient’s needs and the payor’s ability.

Protecting Trust Assets in a Florida Divorce

If you want to protect trust assets in a high-asset divorce, consider these strategies:

1. Establish Clear Terms: Ensure trust documents specify whether assets are marital or non-marital property.
2. Use Prenuptial or Postnuptial Agreements: These agreements can outline how trust assets will be treated in the event of a divorce.
3. Maintain Separation: Avoid commingling trust distributions with marital funds or using them for joint expenses.
4. Seek Legal Guidance: Work with an attorney experienced in high-asset divorces and trust law to safeguard your interests.

What to Do If Your Spouse Has a Trust

If your spouse has a trust and you believe it should be included in the marital estate:

1. Request Full Disclosure: Ensure the trust’s existence and terms are disclosed during the discovery process.
2. Engage Experts: Hire forensic accountants and trust specialists to analyze the trust’s financial impact.
3. Challenge Fraudulent Transfers: If assets were transferred to the trust to avoid division, courts can void such transfers.
4. Negotiate or Litigate: Depending on the circumstances, work with your attorney to negotiate a fair settlement or present your case in court.

FAQs About Trusts in Tampa High-Asset Divorces

1. Can a trust be divided in a Florida divorce?
It depends. Trust assets may be subject to division if they are deemed marital property or funded with marital resources.

2. How do courts determine whether a trust is marital property?
Courts examine factors such as the timing of the trust’s creation, the source of funds, and the terms of the trust.

3. Can a trust shield assets from alimony obligations?
Not necessarily. Courts can consider trust income or distributions when determining alimony awards.

4. What happens if a trust is located in another state or country?
Jurisdictional challenges may arise, requiring specialized legal strategies to address.

5. Should I hire a forensic accountant to investigate trust assets?
Yes. Forensic accountants can trace funds, value trust assets, and identify any hidden wealth.

Conclusion

Trusts add a layer of complexity to Florida high-asset divorces, requiring careful analysis and strategic planning. Whether you are seeking to protect trust assets or ensure their inclusion in marital property, understanding the legal and financial nuances is essential. Working with experienced attorneys and financial experts ensures that your interests are safeguarded and that the divorce process is handled equitably.

At The McKinney Law Group, we provide expert legal services in family law, estate planning, and divorce, including high-asset divorce cases, for clients across Florida and North Carolina. Whether you need a prenuptial agreement in Tampa Bay, help with estate planning in Asheville, or guidance through a high-asset divorce, our skilled attorneys offer personalized solutions to meet your unique needs.

We pride ourselves on a client-first approach, taking the time to understand your goals and developing strategies that align with your specific circumstances. With offices in Florida and North Carolina, we make trusted legal support easily accessible.

At The McKinney Law Group, we focus extensively on prenuptial agreements, estate planning, and high-asset divorcematters. Our attorneys are dedicated to protecting your assets, offering clear legal guidance, and helping you navigate complex legal issues with confidence.

Contact Damien McKinney at 813-428-3400 or email [email protected] to schedule a consultation. Let us help you confidently navigate your legal journey with the expertise and support you deserve.