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Which type of trust is most suitable in a high asset divorce?

Many married couples in Texas, especially those with substantial assets or income, turn to a living trust to safeguard their hard work and pass it along to their children or family members. Typically, married couples will use a joint trust, which keeps their chosen assets together as a shared unit. In community property states like Texas, shared trusts tend to be a favorable option, although both types have their advantages and disadvantages.

For those looking at a high asset divorce, trusts may be considered in light of property division. In a state that operates under community property laws, most property acquired during the marriage is considered marital property, or owned together by each spouse. As a result, a shared trust is generally in line with the same principles that operate community property. Still, it's possible for one couple to have both a shared trust for certain property and separate trusts for other property.

Shared trusts are practical for many spouses. A shared trust often still allows spouses to decide on specific beneficiaries of individual properties. In addition, with a shared trust both spouses have the power to revoke it, so it's not as if the elements of shared trust are set in stone.

However, for couples that enter a marriage with significant separate property acquired before the marriage, separate trusts may make sense. Sometimes a prenuptial agreement will come into play and specify that specific separate property remain separate, even if the marriage comes to an end. In these cases, separate trusts may also be more in line with the purpose of the prenup. Separate trusts may also work for spouses who want to maintain control over a piece of property, such as a valuable family heirloom or cherished family residence.

Making financial decisions both prior to and after a divorce requires much thought and consideration. In addition to making decisions as to how to divide property, spouses going through a divorce may also need to make decisions regarding spousal support, child support and child custody. A family law attorney can help spouses during high asset divorce negotiate their trust options and ensure property will eventually go to its designated recipients.

Source: LifeHealthPro, "The pros and cons of separate trusts among couples," Tom Nawrocki, Jan. 23, 2014

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Attorney Christine K. Lincoln

Christine K. Lincoln offers sound counsel and legal services to protect clients and their families facing divorce and other family disputes.

She will take the time to understand your individual needs and develop a comprehensive solution to protect your rights and interests.

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