Divorce proceedings often raise concerns about the division of assets, especially when it comes to trust funds. Individuals who have set up or are beneficiaries of a trust may wonder whether their spouse can claim a portion of those funds during a divorce. Understanding how trust funds are treated in New Jersey divorce law is essential. With the help of experienced Marlton divorce lawyers at Burnham Douglass, you can navigate this complex area and protect your financial future.

What Is a Trust Fund?

A trust fund is a financial arrangement that allows a third party, or trustee, to hold assets on behalf of beneficiaries. Trust funds are often set up to manage wealth, minimize taxes, or ensure that money is passed on to heirs. Trusts can be revocable or irrevocable, and they can include a variety of assets, including money, real estate, stocks, and other investments.

Trusts play a significant role in estate planning, but regarding divorce, questions arise about whether these funds are considered marital property.

Is a Trust Fund Considered Marital Property?

In a New Jersey divorce, the courts distinguish between marital property and separate property. Marital property includes assets acquired during the marriage, which are subject to equitable distribution. Separate property includes assets that were owned prior to the marriage or received as a gift or inheritance.

Whether a trust fund is considered marital or separate property depends on several factors, including how and when the trust was established, how the funds were used, and whether the trust was commingled with marital assets.

How Is Commingling of Trust Funds Determined?

Commingling occurs when separate assets are mixed with marital assets. For example, if trust funds are deposited into a joint bank account or used for marital purposes, such as paying for a family home, the trust may lose its status as separate property. Once commingling occurs, tracing the original separate property can be challenging, and the court may treat the trust as a marital asset.

What Can I Do to Protect My Trust Fund in a Divorce?

If you want to protect your trust fund in the event of a divorce, there are several steps you can take:

  • Prenuptial or Postnuptial Agreements: One of the most effective ways to protect a trust fund is by signing a prenuptial or postnuptial agreement. These legal documents can clearly define which assets, including trust funds, should be considered separate property in the event of a divorce.
  • Keep Trust Funds Separate: Avoid using trust funds for marital expenses or depositing them into joint accounts. Keeping the funds in a separate account and refraining from mixing them with marital assets can help maintain their status as separate property.
  • Consult with an Attorney: A skilled attorney can help you structure your trust or modify an existing one to safeguard it from being subject to equitable distribution during a divorce.

Contact the Marlton Divorce Lawyers at Burnham Douglass

Whether you are concerned about protecting a trust or need assistance with other financial matters related to your divorce, having the right legal team is crucial. Contact the Marlton divorce lawyers at Burnham Douglass to schedule a free consultation. Call 856-751-5505 or contact us online today. Located in Marlton and Northfield, New Jersey, we serve clients in South Jersey, including Evesham Township, Cherry Hill, Camden County, Burlington County, and Atlantic City.