trusts and divorce

[gailkurp]

State: Washington
Question: My husband and I are in the middle of an amicable divorce and want to create a trust that will protect our life insurance benefits from creditors and future new spouses. We would also like to be able to put future assets into the trust for the benefit of our children (i.e., college funds, etc.) Is a Revocable Living Trust the best way to do this? And would divorce change anything if we prepared it prior to our divorce being final? (We don't have any assets to fund to a trust at this time, other than our life insurance policies.)

 

[loku]

Irrevocable living trust

If you want to protect the assets from future new spouses, you should consider an irrevocable living trust, not a revocable one. Once an asset is put in such a trust, it is protected from everyone, and can be used only for the purposes stated in the trust. Also, the income generated from such a trust is not taxed to you, but to the trust or its income beneficiaries.

Your divorce will have no effect on the trust.