Divorce settlements involving large assets often reshape trusts and alter estate plans, requiring careful review and deliberate changes. It’s helpful to know how to navigate the process and how divorce settlements can affect your estate plans.
Trusts
Trusts are difficult to manage during a high-asset divorce. Consider revisiting the terms set up during the marriage, because some trusts have rules for distributing assets if there is a divorce. Reviewing these provisions to understand the trust’s divisions and protections will provide clarity.
Marital vs. separate property
Determining whether trust assets are marital or separate property profoundly impacts the settlement process. Marital property is subject to division during a divorce, while ownership of separate property stays with its initial holder.
Estate plans
High-asset divorces often trigger a complete overhaul of existing estate plans. Areas of the estate plan to review include:
- Beneficiary designations on life insurance policies
- Retirement accounts
- Other financial instruments
The plan may need updates to reflect the change in marital status. It’s important to review wills and other estate planning documents during a divorce to ensure the correct beneficiaries are listed.
Future planning
After a divorce, try to focus on rebuilding financial security and planning for the future. Planning might involve setting up new trusts or revising existing ones to protect assets. Updating estate plans to reflect current circumstances and future goals is fundamental.
Moving forward
Large assets in divorce settlements can unexpectedly redefine trusts and estate plans. Understanding the impact of your assets can help ensure a smooth transition. Following the steps above can protect your money and ensure your estate plans match your new reality.