What Happens to your Revocable Living Trust in a Divorce
There are many methods for you to choose from when it comes to managing your estate and finances. One of the options available to you is to set up a living trust, also known as a revocable trust. These trusts can help you handle your estate while you are alive and plan for how your finances will be managed when you pass away. Whether you are planning to set up a living trust or have already created one for yourself, it is important to understand how this trust can be affected by a divorce. To learn more about living trusts, how to set up your revocable trust easily with DoNotPay, and how this trust can be affected during divorce proceedings, read more below.
What is a Living Trust?
If you are interested in learning how to manage your estate, one option that you should learn more about is a living trust. You might think that trusts are only for the super-rich to handle their money, but anyone can benefit from establishing a living trust. A living trust, also referred to as a revocable trust, is a legal method for an individual to manage their assets during their lifetime and after their passing. Assets placed in a trust are then managed by the chosen trustee, who can either be the person establishing the trust or a third party. Whether the trustee is the individual who originally set up the trust or not, they must manage the trust’s assets according to the guidelines laid out in the trust. There are two main types of trusts, known as:
- Revocable living trusts
- Irrevocable trusts
To learn more about the differences between these two kinds, keep reading below.
Revocable vs. Irrevocable Trusts
You might be wondering which form of trust is better for you to establish, a revocable living trust or an irrevocable trust. The major difference between these two kinds of trusts is that revocable living trusts can be changed any time after they are first established, while irrevocable trusts are extremely difficult to modify once they have been created. With a revocable living trust, the trust maker can change the guidelines that establish how their assets are managed, add or remove beneficiaries, and more. You can read more about the differences between these trust types here and here.
How Does a Divorce Affect a Living Trust?
If you are planning to establish a living trust, or have already established one, it is important to know how a divorce could affect your trust and the assets it manages. Because a revocable living trust is open to changes, it could possibly be included in your divorce proceedings. How a divorce affects your living trust can vary depending on your state’s divorce laws. One essential issue to figure out is if the assets in your revocable trust are:
- Community property (property acquired by you and your spouse while you were married)
- Separate property (property belonging only to either you or your spouse, including from before you were married)
If the assets in your living trust are considered community property, they could be divided between you and your spouse during divorce proceedings, especially if you established a joint revocable trust together. If the assets in your revocable trust are separate property, they may be less likely to become involved in your divorce settlement.
What Is the Difference Between a Trust and a Will?
While trusts are clearly meant to help individuals manage their assets and estates, you may be wondering what the difference between a living trust and a will is. Wills are more common and most people associate wills with managing assets after death. This makes sense, as wills only go into effect after an individual has died. Living trusts, on the other hand, can be active while you are still alive, including if you are alive and incapacitated, as well as after you have died. You can see more about the differences between a will and a living trust in the table below:
|Avoid the need to probate||Go through the probate process|
|Minimize the need for court disputes||Publish your will documents in public records|
|Avoid publishing your private documents and information in public records||Potentially create disputes in court|
|Help your beneficiaries avoid future costs||Likely cause future costs and fees for your beneficiaries|
Establishing a living trust does not mean you can’t or shouldn’t also create a will. But, a living trust can help you manage your assets in all stages of life and death, while also helping your beneficiaries avoid fees and probate after your death.
How To Draw Up a Living Trust
Given that a living trust is a very important document concerning your assets and their beneficiaries, it is not advisable to draw up your revocable trust on your own. However, hiring a lawyer to help you can be very expensive and time consuming. DoNotPay is a free app that can help you set up a living trust while saving you both time and money. To read more about how to set up your living trust and the associated costs with them, you can click the articles linked below:
Create a Revocable Living Trust with DoNotPay
DoNotPay is the world’s first robot lawyer, made to help you with your problems without you having to pay any expensive lawyers’ fees or waste any of your time. Establishing a living trust using DoNotPay saves you weeks! To start on your living trust using DoNotPay, all you need to do is:
- Open the Revocable Living Trust product through DoNotPay
- Answer our robot lawyer’s questions about your assets, beneficiaries, and location
- Chose some specifications for how your living trust will function
After that, you are all done! Take the document to a notary to get it finalized!
Learn More About Living Trusts in your State Using DoNotPay
|Washington State||New Jersey||Louisiana|
What More Can DoNotPay Do?
- Appeal parking tickets anywhere
- Manage subscriptions and services
- Chargebacks and refunds
- Compensation for victims of crime
- Defamation demand letters