If you have a trust and are considering divorce, you may have one pressing question: Will that trust become part of the divorce? The answer is not always straightforward. Courts look beyond the existence of a trust when deciding how it fits into property division under Massachusetts law.
Whether a parent, grandparent or another family member created the trust, its terms and the rights it gives you as a beneficiary can influence the court’s analysis. Knowing what courts consider can help you better understand the financial issues that may arise during your divorce.
Not all trusts receive the same treatment
Courts examine the trust itself before deciding how it fits into your divorce. Some of the factors they may consider include:
- Whether the trust is revocable or irrevocable
- Whether the trustee must make distributions or may decide when to make them
- When the trust was created
- Who established the trust
- What rights the trust gives you as a beneficiary
These factors help the court determine how your rights as a trust beneficiary may affect the financial issues in your divorce. Two trusts with similar assets may lead to different outcomes because they give beneficiaries different rights.
Your rights as a trust beneficiary may affect your divorce
Another key question is what rights you have as a trust beneficiary. If you have a legal right to receive distributions, the court may evaluate your situation differently than if distributions depend entirely on the trustee’s discretion.
The court may also consider how much control you have over the trust and whether you have received regular distributions in the past. Together, those facts help the court determine how your trust may factor into your divorce.
How the trust was used during your marriage
The court may also consider how trust assets or trust income factored into your finances during the marriage. Examples include:
- Paying household expenses
- Purchasing the marital home
- Supporting a family business
- Covering educational expenses
- Providing regular income for family living expenses
Using trust assets in these ways does not automatically make them marital property. Instead, the court considers those facts along with the trust’s terms and your rights as a beneficiary when evaluating the financial issues in the divorce.
Your trust may affect more than property division
Property division is only one part of the financial picture. Trust income may also become relevant when the court evaluates alimony or child support. If the trust owns a business interest or investment assets, those holdings may also require valuation during the divorce process.
For that reason, a trust may affect several parts of a divorce, even if the court does not divide the trust itself. Because every trust has different terms, courts evaluate each case based on the trust’s language and the specific facts of the marriage.