Divorce and Usings Trusts to Avoid Probate
At the Orange County Law Office of David P Schwarz we have used Trusts a very successful alternative to Probate. Please contact our office at 949 735 9266 or via the web. We can also be reached by email at firstname.lastname@example.org.
A good divorce lawyer will outline how a trust works compared to a will. A trust is a fiduciary relationship with respect to property, not a person or entity separate from its trustees or beneficiaries. It “is simply a collection of assets and liabilities.” Legal title to trust property is held by the trustee. Judgment against trust, but not trustees, is meaningless and unenforceable
An “inter vivos” or “living” trust is, as the name implies, a trust established during the lifetime of the trustor (grantor or settlor) or the lifetimes of multiple trustors (grantors or settlors). The most common inter vivos trust is a revocable trust, to which the grantor transfers all, or substantially all, of his or her property for lifetime management.
In contrast, an experienced divorce lawyer will explain the differences between which trusts to use. A testamentary trust is created by a will or codicil. And the trust does not come into existence until the will or codicil has been admitted to probate and the court has decreed the trust's establishment and, if necessary, its interpretation. Of necessity, therefore, such a trust may only be funded through the probate process … by the court's ordering the transfer of assets into the trust during or upon conclusion of probate administration.
At Orange County Law Office of David P Schwarz we will be certain to guide our clients in the correct direction in choosing the best trust to create for our client during the divorce. Certain nonprobate assets may be “poured” directly into a testamentary trust without the necessity for probate if the assets would not normally be subject to probate administration—e.g., insurance policy proceeds, where the designated beneficiary is the duly-appointed and acting trustee under the decedent-insured's will.
Before or after the rights and benefits (or their proceeds) are transferred to the trustee, the court in which the probate proceedings are pending may: Determine the trust's validity and terms; Fill vacancies in the office of trustee and require a trustee's bond or Grant additional powers to the trustee
A divorce lawyer will further explain to their client how a trust avoids probate. An inter vivos trust is not part of the grantor's probate estate, except in the exceedingly rare case where the trust instrument “pours back” the trust property to the grantor's estate on his or her death. Property held in an inter vivos trust is not subject to probate administration even if the decedent-grantor was a life beneficiary of the trust or retained an unexercised power to revoke the trust.
Further, if the decedent-grantor transferred assets during his or her lifetime to an irrevocable trust in which the grantor retained no ownership interest, the trust's assets are not subject to the claims of the decedent's creditors.
However, this is not to say the trust is immune from contest. The grantor's establishment and maintenance of an inter vivos trust may be challenged on the same grounds as any donative transfer—e.g., lack of capacity, undue influence, fraud, duress, menace, etc.
At the Orange County Law Office of David P Schwarz we are very experienced in handling trust cases which divorce couples can use to bypass probate. Please contact our office at 949 735 9266 or via the web. We can also be reached by email at email@example.com.