Trusts can be a powerful tool for high net worth individuals seeking to protect their assets in the event of a future divorce, while also ensuring efficient wealth transfer to future generations. There are several ways that trusts can be used to protect against issues caused by divorce impacting efficient wealth transfer.
First, trusts can be used to protect assets from being subject to division between spouses in the event of a divorce. By transferring assets into a trust, the assets are no longer owned by an individual and are instead owned by the trust. This can make it more difficult for a spouse to claim an ownership interest in the assets in the event of a divorce.
Transfer of Assets
Second, trusts can be used to ensure that assets are transferred to specific individuals or entities in accordance with an individual’s wishes. By setting up a trust, high net worth individuals can specify how assets are to be distributed to future generations, rather than leaving these decisions up to the courts or other individuals. This can help to ensure that assets are transferred efficiently and effectively to future generations.
Third, trusts can be used to provide ongoing support for family members or other beneficiaries. For example, a trust can be established to provide for the ongoing support and education of a child or grandchild. This can help to ensure that assets are used in a way that supports the individual’s long-term goals and objectives.
Protection From Creditors
Trusts can also be used to provide additional protection for assets from creditors or other legal risks. By transferring assets into a trust, individuals can help to ensure that these assets are protected from legal claims, bankruptcy proceedings, or other risks that may arise in the future.
However, where assets are transferred into a trust, for the express purpose of evading responsibilities to creditors, courts are likely to see through the trust.
Types of Trusts