How Are Trusts Divided in an Illinois Divorce?

 Posted on June 28, 2023 in Divorce

When a couple decides to divorce, one of the most important issues that need to be addressed is the division of their assets. This division may also include any trusts that have been established on behalf of or by either spouse. A trust is a legal entity established to hold and manage assets placed in the trust on behalf of beneficiaries named in the certificate of trust. Depending on the type and the amount of assets contained, trusts can have a significant impact on how assets are divided in an Illinois divorce.

Trust Classification

The first step is determining the classification of the trust. Is the trust separate property and protected from asset division or is it part of the marital estate and subject to that division? Generally, if a trust was established before the couple married or if it was established through inheritance, it is considered separate property. However, if the trust was jointly managed by both spouses and/or contributions into the trust included marital assets, the court may consider it marital property that is subject to division.

Trust Provisions

The terms of the trust document also play a critical role in determining how the assets in the trust are addressed in a divorce. The certificate of trust may contain provisions regarding the distribution of assets in the event of divorce or dissolution of marriage. It is essential to carefully review the trust agreement to understand how it addresses divorce-related matters and the rights of the divorcing parties and another reason why having a skilled divorce attorney representing you is crucial.

Equitable Distribution

Under Illinois law, the division of marital assets in divorce is conducted under the equitable distribution doctrine. This means that marital assets, including any trusts that are considered marital property, are divided fairly, but not necessarily equally, between the spouses. Some of the factors considered in this distribution include how long the couple was married, financial contributions, and the needs of each spouse.

Trust Modification or Termination

In certain cases, the court may have the authority to modify or terminate a trust to facilitate the division of assets in a divorce. This can occur if the trust no longer serves its intended purpose or if it hinders the equitable distribution of assets. However, modifying or terminating a trust is a complex legal process that requires compelling reasons and a court order.

Spousal Support

Trusts may also impact spousal support. If a trust generates income, it can be considered when determining the financial support obligations of the divorcing parties. The court will evaluate the trust's income and its ability to contribute to the financial needs of the spouse seeking support.

Contact a DuPage County Divorce Lawyer

The division of assets, especially when there are trusts or other financial issues involved, can be a complex issue, especially in divorces involving older couples who often have established estate planning tools, investment portfolios, and other assets that may or may not be part of the marital estate. To learn more, call Divorce Over 50 - Goostree Law Group at 630-634-5050 to schedule a free consultation with one of our experienced Kane County gray divorce attorneys.

Source:

https://www.ilga.gov/legislation/ilcs/documents/075000050k503.htm