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Protecting Your Child’s Trust Fund During Divorce

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If you’re concerned about how divorce could impact your child’s trust or inheritance, contact The Betz Law Firm today.

When a marriage ends, property division can be one of the most contentious and legally complex aspects of the divorce process—especially when trust assets are involved.

At The Betz Law Firm, we often receive questions from parents and grandparents concerned about how to protect a child’s trust from being divided or accessed during a divorce.

Understanding Trust Assets in Missouri Divorce Proceedings

Trust assets are generally considered separate property and should remain protected from division during divorce. However, the reality isn’t always straightforward. Missouri courts follow equitable distribution laws, meaning they divide marital property fairly but not necessarily equally.

  • The key question becomes: are the trust assets truly separate, or have they become commingled with marital property?
Typical scenarios where trust assets may be at risk:
  • Commingling funds: Using trust money for household expenses, mortgage payments, or family vacations
  • Joint management: Both spouses acting as trustees or having access to trust accounts
  • Beneficiary changes: Adding a spouse as a beneficiary during the marriage
  • Trust modifications: Altering trust terms that may affect asset protection

Types of Trusts That May Affect Your Divorce

  • Educational Trusts (529 Plans)Missouri’s 529 education savings plans are particularly vulnerable during divorce. If both parents contributed to the account or if marital funds were used for contributions, the court may consider these assets when determining support obligations or property division.
  • Irrevocable Trusts – These trusts typically offer the strongest protection since the assets are legally removed from your ownership. However, if you serve as trustee or have retained certain powers, the trust assets might still be considered in divorce proceedings.
  • Revocable Living Trusts – Since you maintain control over these assets, they’re more likely to be considered marital property if funded during the marriage with joint income.
  • Special Needs Trusts – These trusts require particular attention during divorce to ensure continued eligibility for government benefits while protecting the child’s financial security.

Steps to Protect Your Child’s Trust Assets

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1. Document the Trust’s Origins – Gather all original trust documents, including:

  • The initial trust agreement
  • Records of all contributions and their sources
  • Bank statements showing fund sources
  • Documentation proving the trust’s separate property nature

2. Avoid Commingling – Never mix trust funds with marital assets. This includes:

  • Keeping separate bank accounts for trust funds
  • Using only trust income for the child’s specific needs
  • Maintaining detailed records of all trust transactions
  • Avoiding the use of trust funds for family expenses

3. Review Trustee Arrangements – If your spouse serves as a co-trustee, consider:

  • Requesting their resignation as a trustee
  • Appointing a neutral third-party trustee
  • Modifying trust terms to protect against future conflicts

4. Update Beneficiary Designations – Review and update:

  • Trust beneficiary designations
  • Life insurance policies held in trust
  • Retirement account beneficiaries affecting trust funding

Frequently Asked Questions About Trusts and Divorce

Q: Can my ex-spouse claim trust assets established by my parents for our children?
A: Generally, no, if the trust was properly established and maintained as separate property. However, the court may consider trust income when calculating support obligations.

Q: What happens if I used trust money to pay for family expenses during our marriage?
A: This commingling may compromise the trust’s protected status. However, proper documentation and legal arguments may still preserve some protection.

Q: Should I modify the trust terms during divorce proceedings?
A: Trust modifications during divorce require careful consideration and should only be done with experienced legal counsel to avoid unintended consequences.

Q: How do trust assets affect child support calculations in Missouri?
A: While trust principal typically isn’t considered income, regular distributions to benefit the child may affect support calculations.

Protecting Your Family’s Future

Divorce is challenging enough without worrying about your children’s financial security. By understanding how Missouri law treats trust assets and taking proactive steps to maintain proper separation, you can preserve these critical resources for your children’s future needs.

Trust asset protection during divorce requires a delicate balance of legal knowledge, strategic planning, and meticulous documentation. The stakes are too high to navigate this process alone.

Working with St. Louis Family Law Attorneys

Protecting trust assets during divorce requires careful legal strategy and thorough documentation. At The Betz Law Firm, we understand how Missouri courts handle complex financial arrangements involving children’s trust assets. Our approach includes:

  1. Comprehensive asset review: We examine all trust documents and financial records to establish proper asset classification
  2. Strategic planning: We develop protection strategies tailored to your specific trust arrangements
  3. Court advocacy: We present compelling evidence to protect your child’s financial interests
  4. Ongoing compliance: We ensure all court orders and trust requirements are properly maintained

Speak With an Experienced Attorney

Our firm uses experience, good communication, and availability to help families navigate life-changing events.