Q: Does a trust protect my home purchased before marriage if I am to get divorced?
There are a couple of factors to review. a) Was the home placed in a trust prior to or after the marriage? b) Is the trust revocable or irrevocable? c) Whose benefit was the trust intended for? Until recently, trusts were seen as assets when a court decided how assets were to be distributed upon divorce. This still applies to a revocable trust, but may not now to an irrevocable trust. Depending on timing, the terms of the trust, the trust property, and the nature of the beneficial interest, a spouse’s interest in a trust may or may not constitute a divisible asset in a Massachusetts divorce.
Generally speaking, a trust maker "testator" cannot prevent his or her assets from being divided in a divorce by placing the assets in a revocable trust. Since the trust can be revoked, most courts will continue to view the testator as the true owner of any assets held by the trust at the time of the divorce. If a testator creates a trust for his or her own benefit, to hold his or her own assets, then the beneficial interest is generally a divisible asset in a divorce. In this case, you generally cannot avoid the division of assets by placing your own assets in an irrevocable trust for your own benefit. However, if the trust is created by a husband for the benefit of someone other than the wife, for example the husband's siblings, then the property will likely be excluded from the division of assets.
The appellate decision in Massachusetts' Pfannenstiehl v. Pfannenstiehl is the case to look at. This is where the Supreme Judicial Court "SJC" ultimately decided that a husband’s interest in an irrevocable spendthrift trust, created for the benefit of the husband and his siblings and their children was so speculative as to constitute nothing more than an expectancy, and therefore not assignable to the marital estate. The trust contained a standard “spendthrift clause”. It stated “neither the principal nor income of any trust created hereunder shall be subject to alienation, pledge, assignment or other anticipation by the person for whom the same is intended, nor attachment, execution, garnishment or other seizure under any legal, equitable or other process.” The SJC affirmed a long-standing general rule that in most cases, such interests are excluded from division in a divorce.
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