The realization that you may want to end your marriage produces strong emotions. On top of regrets about your relationship, financial concerns can cause you to worry about your future. You may have heard of premarital or postmarital agreements for asset protection should a divorce occur in Illinois. Even if you never executed such an agreement, your assets that are separate from your marital estate may not be subject to division during a divorce.
Inheritances held in trust
An inheritance may provide you with a lump sum of cash, real estate, stocks or other assets. If you mingle these assets with those of your marital estate, then keeping them out of a divorce’s property division phase becomes difficult.
However, when your benefactor places your inheritance in a trust, its legal structure segregates the assets definitively from your marital estate. The inheritance essentially becomes the property of the trust.
Trusts for other assets
Before getting married, people sometimes sidestep the issue of a premarital agreement by shifting assets into a trust. This action usually costs less than negotiating and executing a premarital agreement, and you do not need your future spouse’s permission to establish a trust before getting married. For the greatest level of asset protection, some people create offshore trusts that only need to comply with foreign regulations instead of domestic laws.
After marriage, however, shifting assets into a trust may expose you to legal challenges. Your spouse may call it a fraudulent conveyance during litigation.
Illinois family courts seek to divide marital assets equitably. This does not have to mean an equal split between divorcing spouses. You may succeed in protecting your assets during a divorce with ownership documentation that proves their separateness from the marital estate.