Protect Assets Held in a Spendthrift Trust From DivorceProtect Assets Held in a Spendthrift Trust From Divorce

It’s a common misconception in the estate-planning community that assets held in a spendthrift trust are protected against claims in a divorce. It’s also a common misconception that setting up a spendthrift trust for your client’s children’s share of the family wealth obviates a prenuptial agreement (prenup). When contemplating marriage, one of the most unpleasant tasks is to ask the spouse-to-be to sign a prenup. If assets are protected from creditors and transfer taxes (estate, gift and generation-skipping taxes) by reason of being held in a spendthrift trust, there may be a temptation to avoid such unpleasantness. It stands to reason that if the assets of the trust can’t be attached by creditors, they should be, likewise, exempt from ...