A trust is set up by a grantor (aka settlor or trust maker) typically for the benefit of a beneficiary, who may receive distributions during the grantor’s lifetime or upon death as directed by the trust. Trusts can be revocable or irrevocable, funded by marital or separate property, which speaks to how they will be handled in an Illinois divorce.
Revocable and Irrevocable Trusts as Property in a Beneficiary’s Divorce
The beneficiary to a revocable trust has no legal rights to trust principle or income because the grantor can cancel the trust at any time. Therefore, if the beneficiary divorces, no problem. The beneficiary owns nothing to divide, which works well in states where a potential ex-spouse may be entitled to a cut of a spouse’s inheritance or gift.
If the trust is irrevocable and the assets are in fact under the beneficiary’s control, there will be little consequence in Illinois because, generally, inheritance and gifts are considered separate property in a divorce as long as the assets are not mingled with marital assets during the marriage.
Take note, however, that if a beneficiary spouse is earning income from a trust, the court may use that income along with all other sources of income to calculate child support or alimony to be paid, or conversely, the amount of child support or alimony the recipient of the trust income will receive.
Revocable Trusts as Property in a Grantor’s Divorce
On the other side of the coin, because the grantor can cancel or revoke the trust anytime, they are in control of the assets. Therefore, assets in a revocable trust can be divided in a divorce with the exception of separate property defined as assets acquired prior to the marriage or inheritance or gifts given to only one spouse during the marriage.
Contact an Experienced Illinois Marital Property Division Lawyer
Trusts are typically part of an estate plan which may also include documents such as wills, power of attorney, etc., that require the attention of your attorney in a divorce. There will more than likely be changes or updates to these important documents as you work through the process of divorce. If you have questions regarding trusts with regard to the division of marital property in an Illinois divorce, contact the Law Offices of Schlesinger & Strauss LLC for more information.
