Trusts in Your Divorce Case (Part 1)

Part 1: Key Players and Their Responsibilities

Trusts have become a popular tool for tax management and estate planning. Parties prior to or during the marriage form trusts for financial organization and benefit.

However, what happens to those trusts when the parties decide to divorce?

This series will delve into the roles of those involved in trusts, a basic overview of the various types of trusts, and how lawyers and the Court may address trusts in divorce. In Part 1, we specifically identify the key players and their responsibilities or capacities.

1. GRANTOR:

Also known as the Settlor. This is the person who establishes the trust. He or she determines the structure and terms of the trusts, the assets that will be held within the trust, and who will be named to the other roles of the trust. At the initial phase, the Grantor will often meet with a trust and estate attorney to assist them in preparing the trust instrument.

2. BENEFICIARY:

This is the party that receives the benefits of the trust. Trusts can have one beneficiary or multiple beneficiaries, ranging from single individuals to entire organizations or entities. Beneficiaries may receive such benefits/distributions from income generated by the trust or the principal assets. A trust may also include “layers” of beneficiaries, such as a current beneficiary who is receiving benefits now and a remainder beneficiary who will receive his or her benefits after the current beneficiary.

3. TRUSTEE:

This is the person or an institution (i.e. a bank) that oversees and manages the trust. The trustee is responsible for effectuating the terms of the trust and ensuring appropriate distributions are made to the beneficiaries. The trustee has a fiduciary duty to the beneficiaries to act in their best interests and ensure the trust property is maintained.

Analyzing trusts in divorce can be complicated. Estate experts are often retained by family law attorneys for assistance. At Obermayer, clients have the opportunity to work with both family law and estate attorneys, who collaborate and are experienced in handling these complex matters. For more information, set up a consultation with an Obermayer family law attorney today.

The information contained in this publication should not be construed as legal advice, is not a substitute for legal counsel, and should not be relied on as such. For legal advice or answers to specific questions, please contact one of our attorneys.