Are Trust Funds Marital Property in Illinois?

Are Trust Funds Marital Property in Illinois?

Contrary to popular stereotypes, trust funds are not the exclusive province of the wealthiest people. Estate planning lawyers often encourage clients to set up trusts in order to save money on taxes; especially in blended families, trusts are an effective way of preventing inheritance disputes during probate. Setting up a trust fund can give you a feeling of financial stability and family stability, at least as much as owning a house and living in it with your spouse and children can. Gray divorce is increasingly common, and sometimes couples who have stayed together long enough to set up trust funds together decide to divorce. The effect of trust funds on a divorce can be a contentious issue. If you are the settlor or beneficiary of a trust, with or without your spouse, and you are going through a divorce, contact a Rolling Meadows property division lawyer.

When One Spouse is the Beneficiary of a Trust

Inherited assets are considered separate property, even if you or your spouse received them during your marriage. If one spouse receives money from a trust set up by a deceased family member, the income from the trust is considered that spouse’s separate property. This means that the court will not require you to divide your inherited wealth (that you received through a trust) with your spouse, but the court could reduce the amount of maintenance it orders your spouse to pay you. Likewise, the court might count your trust fund money as marital property if you deposit it in a marital bank account or pay it toward the mortgage on your marital home.

The Family Law Court Treats Revocable Trusts Just Like Any Other Asset

Revocable trusts are, by nature, subject to change during your lifetime. The court can order you to liquidate a revocable trust during your divorce, just as it can order you to liquidate any other marital or nonmarital asset. Family law courts have ordered people to sell real estate properties in order to satisfy obligations or to make it easier to divide the marital property, and the same goes for revocable trusts.

If you and your spouse set up the revocable trust together, it is probably marital property. If only one of you set up the revocable trust, it is probably nonmarital property, unless you used marital property to fund the trust, in which case the court will treat it as a marital asset. Disputes over which assets are marital and which ones are separate are common in high net worth divorce, and high asset divorce lawyers can help you resolve these disputes.

Contact the Rolling Meadows Property Division Lawyers at Andrea Heckman Law

The more property a couple owns, the more room there is for disagreement about how to divide it. A Rolling Meadows property division lawyer can help you resolve disputes about the division of valuable assets such as trust funds, businesses, and real estate property. Contact Andrea Heckman Law in Rolling Meadows, Illinois to discuss your questions about divorce and trust funds.