How to Protect Your Assets Using a Trust in a High Net Worth Divorce
During a divorce, there might be a million different things running through your mind. Aside from the emotional impact, you might also be worried about the financial fallout of your separation. How will this affect your wealth? How can you protect your assets during a divorce? Will there be any long-term effects on your business? These considerations are magnified during a high net worth divorce when millions of dollars in property is on the line.
If you are going through a high net worth divorce in Monroe, you need a professional legal advocate who can assist you with these concerns. Choose a qualified, experienced divorce attorney in Union County, and you stand a much better chance of protecting as many of your assets as possible. These legal experts can help you use a range of different strategies to accomplish this goal.
A tried-and-true method for protecting assets in a high net worth divorce is a trust. When you put your wealth in a trust, it generally becomes much harder for your spouse to access these funds. However, there are several additional considerations that you need to keep in mind when protecting your trust during a divorce.How Equitable Distribution Works in North Carolina
North Carolina is an “equitable distribution” state, which means that property is divided between spouses in an equitable manner during a divorce. “Equitable” does not necessarily mean “fair.” Spouses may receive much more (or less) than a 50% share of the property, depending on certain factors that the court deems significant.
However, equitable distribution only applies to marital property. Marital property encompasses all assets that were accumulated during the course of your marriage. For example, a house that was purchased during your marriage would classify as marital property.
If you accumulated assets prior to your marriage, you do not have to divide them with your former spouse. This property is considered “separate property,” and it is not eligible for equitable distribution. In addition, inheritance money is considered separate property.Can My Spouse Access My Trust?
As long as you set up your trust before the marriage contract was signed, your spouse will have a hard time accessing those funds. This is because your trust will be considered separate property. On the other hand, your trust may be subject to equitable distribution if it was established during your marriage. In this situation, your trust is considered “marital property.”
With all that being said, your spouse may try to benefit from your trust even if it is considered separate property. They may argue that since you have access to tremendous wealth in your trust, they deserve a much larger share of the marital property. They may also argue that they deserve more funds in the form of alimony or child support.Additional Considerations
Remember, as soon as you withdraw money from your trust, you are essentially defeating the entire purpose of the trust. When this money is withdrawn during a marriage, it becomes classified as marital property. You would then be forced to divide these funds with your spouse in a divorce.
If you are not careful, your spouse may be able to manipulate loopholes in the “fine print” of your trust. For example, if your trust stipulates that your spouse can demand a distribution at any time, the court may consider these funds to be at least partly in their possession.
Finally, you should consider the type of trust if you are worried about your spouse getting access to the funds. There are many trusts that offer significant protections to spouses who are going through a divorce. A great example is a domestic or foreign protection trust. This type of trust allows you to transfer all your separate property (including your business) into the ownership of the trust, not you. This means that for all intents and purposes, the court cannot take the value of these assets into account during the divorce proceedings. Keep in mind that you must establish this trust before you get married for it to offer these kinds of protections.Enlist the Help of a Qualified Divorce Attorney Today
Although it can be tricky to find a qualified, experienced divorce attorney in Union County, there is always help available. Arnold & Smith, PLLC is experienced in high net worth divorces in North Carolina, and you can depend on them to help you protect your assets. If you would like to ensure that your trust is well-protected during your divorce, reach out today. We will help you develop an action plan.