Virginia individuals who want to pass down assets to specified loved ones can use a trust to do so. These are fairly common for a variety of reasons. However, they can be a bit confusing when dealing with a high-asset divorce.
What is a divorce decree?
When you go through a high-asset divorce, you’ll work with your lawyer, the judge and other parties to come up with a division of your assets. While a divorce decree has many parts to it, one extremely important part is the division of property section. This states which spouse is entitled to which assets. It’s important to realize that a divorce decree is a court order.
What is a trust?
A trust is a fiduciary relationship where a trustor gives a named beneficiary legal rights to manage their designated asset or assets. Upon the trustor’s death, the beneficiary will automatically receive the asset or assets that are in the trust. This estate planning tool is a popular strategy to reduce the number of assets that go through the probate process after a person’s passing.
Sometimes an asset’s passing down may be confused by various documents. For example, a trustor may place an asset like their home into a trust. However, that same home may be named as another party’s asset in a divorce decree. Determining who is the real owner of the asset comes down to what legal tool rules. Between a trust and a divorce decree, the divorce decree wins out because it’s a court order.
It’s not uncommon for a deceased person’s assets to be named in different types of legal documents like a trust and a divorce decree. It’s crucial to understand what legal arrangement overrules the other so that you know who will likely end up with the asset. In the case of a trust and a divorce decree, a divorce decree wins out every time because it’s a court order.