Is Property Held in a Trust Subject to Divorce?

One of the most common questions we hear in divorce cases involving significant assets is: “If the property is in a trust, is it protected from divorce?” The short answer is not always. Whether trust property is subject to division in a divorce depends on how the trust is structured, who controls it, and how it was funded. Courts look beyond the label “trust” and examine the substance of the arrangement. Below is a practical overview of how trusts are typically treated in divorce.

Revocable Trusts: Usually Not Protected

A revocable living trust is the most common estate-planning tool. In most cases, assets placed in a revocable trust are still treated as owned by the person who created the trust. Why? Because the grantor:

• Can revoke the trust at any time

• Can amend its terms

• Can withdraw assets at will

From a divorce perspective, a revocable trust is generally viewed as a probate-avoidance mechanism, not a true transfer of ownership.

Divorce impact:

• Assets funded with marital property are typically considered marital assets, even if titled in the trust.

• Assets funded with separate property may remain separate, unless they were commingled or treated as marital during the marriage.

Bottom line: A revocable trust usually provides little to no protection in divorce.

Irrevocable Trusts: It Depends on Control

An irrevocable trust can, in some cases, shield assets from division—but only if it is truly irrevocable and the spouse does not retain meaningful control.

Courts closely analyze:

• Who created the trust

• Who benefits from it

• Whether the spouse can control distributions

• Whether the spouse serves as trustee

• Whether trust funds are used like personal income

If a trust functions like a personal checking account, courts are far more likely to treat it as part of the marital estate.

Third-Party Trusts (Parents or Relatives)

Trusts created by parents, grandparents, or other third parties for one spouse are generally treated as separate property and are often excluded from division.

However, there are important caveats:

• Distributions received during the marriage may be treated as marital income

• Trust income may be considered when determining:

  
  

  • Spousal support

  • Child support

  • Each party’s standard of living

Even if the trust principal is excluded, it can still significantly affect financial outcomes in a divorce.

Timing and Funding Matter

Courts also look closely at:

• When the trust was created (before or during the marriage)

• What assets were used to fund it

• Whether marital income was added

• How trust assets were used during the marriage

A trust created shortly before divorce—or funded with marital assets—will receive heightened scrutiny.

Key Takeaway

A trust does not automatically protect assets from divorce. Courts focus on control, access, and use, not just formal titles.

If you are:

• Entering a marriage

• Considering estate planning

• Facing a divorce involving trust assets

It is critical to obtain legal advice tailored to your specific trust structure and state law.