Florida case illustrates the issues that arise in divorce when an irrevocable trust is involved.
An appellate court in Florida disagreed with an earlier decision and determined that a trust cannot be modified with the assets divided in divorce, according to Wills, Trusts & Estates Prof Blog in “Equitable Distribution for a Couple’s Irrevocable Trust?“
The issue surfaced when a Florida man settled an irrevocable trust with his wife and children named as the beneficiaries. Assets were transferred into the trust, including the couple’s home. They later decided to get divorced.
If the couple still owned the home outside of the trust, then it would have been used as part of an equitable property division between them. A Florida trial court determined that was also the case with the irrevocable trust and ordered that the trust’s terms be modified and the assets equitably divided.
An appellate court in Florida did not agree that it could be modified.
The lesson is that sometimes estate planning techniques can become problems when circumstances change. One thing to think about when planning your estate are some of the things in your life that could possibly change, so you can make sure your estate plan can be adapted to them easily.
Another lesson to learn from this case is that when getting divorced, you need to get your estate planning attorney involved, since you will need to redo your estate plan in an appropriate way.
An estate planning attorney can advise you on the laws of your state, when creating an estate plan that meets your unique situation.