During the process of divorce in Illinois, one of the biggest concerns a person may have is how to handle asset distribution and property division. After all, the decisions made during the divorce will impact the individual’s ability to be financially secure in the years following the divorce. Third-party trusts may especially be a source of contention during divorce.
An example of a third-part trust is one that is created for either the wife’s or the husband’s benefit by the individual’s parents or grandparents. The question is if a woman who is getting divorced and has income from this type of trust that is specifically intended to provide for her welfare, support, education and health, does she have to give some of this income to her ex? Legal cases that have examined this type of question are often appealed to a higher court. Thus, if a person is ordered to divide his or her trust fund dollars with his or her ex, the person may wish to appeal.
One way to prevent this difficult situation is to have the parent or grandparent setting up the trust include language designed to guard against the inclusion of the trust in a divorce settlement. A person may even have the trust’s terms emphasize that it should never be deemed a marital asset. Marital assets legally have to be divided in a divorce.
If two individuals in Illinois can find common ground when dealing with assets during a divorce, they may be able to reach a settlement that is mutually beneficial without having to litigate the divorce. However, if the two parties cannot see eye-to-eye, then divorce litigation is unavoidable. An applied knowledge of the law may help people to make divorce-related decisions that will be in their best interest long term.
Source: Forbes, “What Divorcing Women Need To Know About Protecting Third-Party Trusts“, Jeff Landers, Oct. 8, 2015