Trusts can be an important tool for protecting assets and accomplishing estate planning goals. However, they can also create serious issues when they are structured in a way that limits a spouse’s rights in divorce.
In my previous article on estate planning and divorce, I discussed how these documents can be used to improperly shield marital assets. This raises another important question: What happens if you have already signed those documents?
Many people assume that once they sign a trust or other estate planning document, there is nothing they can do. That is not always the case. However, addressing the issue after documents have already been signed can be far more complicated than addressing it before they are created.
If you discover that a trust or other estate planning document may affect your rights to marital assets in a divorce, you should understand your options and act quickly.
Make Your Concerns Known as Soon as You Discover the Issue
The first step is to act quickly. As soon as you discover a document that could affect your divorce rights, make it clear that you do not agree with its provisions. Do not wait until a divorce is filed. Creating a record that you raised concerns about the document may become important later.
It is also important to understand that raising concerns about the document may create conflict within the marriage and could lead your spouse to file for divorce. That possibility does not mean you should avoid protecting your rights. The circumstances surrounding the document matter.
There are legitimate reasons couples create trusts and other estate planning documents. These documents can serve important purposes, including protecting assets and planning for the future. The concern arises when a document is structured in a way that affects one spouse’s rights in divorce without that spouse fully understanding the consequences.
If a spouse creates a document designed to protect marital assets from the other spouse in a divorce, it raises questions about the purpose of that planning and whether both spouses understood how the document could affect their rights.
Consider Whether Other Recovery Options Exist
Depending on the circumstances, there may be other options to consider. One issue that should be examined is whether the attorneys involved properly addressed potential conflicts of interest. When estate planning involves both spouses, each spouse should understand whether independent legal advice is appropriate.
A conflict can arise when an attorney is helping prepare documents that benefit one spouse while potentially limiting the rights of the other. At that point, the estate plan is no longer simply a shared decision between spouses. An estate planning attorney who fails to recognize or address that conflict may become a potential source of recovery if their actions contributed to the harm.
Address These Issues Before Documents Are Signed
While there may be steps available after documents have already been signed, there is no guarantee those efforts will be successful. Every case is different. A judge may consider the circumstances surrounding the signing, including whether both spouses understood the document and whether appropriate legal advice was provided. Another judge may conclude that the document was signed and should be enforced.
The best way to avoid this uncertainty is to address these issues before documents are finalized.
When couples are creating estate plans or making decisions about significant assets, both spouses should understand how those decisions may affect their rights in the future. Seeking independent legal advice may feel uncomfortable, especially in a marriage where trust exists between spouses. However, addressing these issues before signing documents can prevent significant problems later.