How Divorce Affects Your Revocable Trust (And What You Can Do About It)

Divorce is complicated enough without worrying about what happens to your revocable trust. If you're going through a divorce and have assets in a revocable living trust—whether it's a DIY trust from LegalZoom or one crafted by an attorney—you're probably wondering: Is my trust protected? How do we divide trust assets? Can my spouse claim half of everything? The answers depend on when you created the trust, how it's funded, and your state's laws. Here's what you need to know to protect your interests and navigate trust division during divorce proceedings.

How Divorce Affects Revocable Trusts: The Legal Reality

The hard truth about revocable trusts and divorce is this: your revocable living trust provides zero asset protection during marriage dissolution. Courts treat assets in revocable trusts the same as assets you own directly. Since you maintain complete control over a revocable trust—you can modify it, revoke it, or withdraw assets at any time—the law considers these assets part of your personal estate.

Why Trust Assets Aren't Protected

Unlike irrevocable trusts, where you permanently give up control, revocable trusts function more like sophisticated filing systems. You're still the beneficial owner of everything inside. When divorce courts evaluate marital property, they look through the trust structure and focus on the underlying assets and when you acquired them.

This reality check applies whether you created a simple LegalZoom trust or worked with a high-end estate planning attorney. The level of sophistication doesn't change the fundamental legal principle: revocable means divisible in divorce.

Marital vs. Separate Property Classification

Trust assets follow the same property classification rules as non-trust assets:

Separate property typically includes:

• Assets you owned before marriage and placed in trust
• Inheritances received during marriage and kept separate
• Gifts specifically given to you alone
• Assets purchased with separate property funds

Marital property generally includes:

• Assets acquired during marriage with joint funds
• Appreciation on separate property due to marital efforts
• Trust assets commingled with marital funds

State Law Variations

Your state's approach to property division significantly impacts how courts handle trust assets:

Community property states (like California and Texas) generally consider most assets acquired during marriage as 50/50 owned, regardless of whose name appears on the title or trust documents.

Equitable distribution states divide marital property based on fairness factors, which might include each spouse's financial contribution, length of marriage, and future earning capacity.

Common Misconceptions

Many people mistakenly believe that creating separate trusts protects their assets. Tom and Lisa discovered this the hard way. They used an online service to create individual revocable trusts, thinking this would keep their assets separate. However, because they funded both trusts with marital income and jointly-owned property during their 15-year marriage, the court treated most trust assets as marital property subject to division.

Dividing Trust Assets: What's Yours, Mine, and Ours

Asset classification becomes complex when separate and marital property mix within the same trust. Courts must trace the source of funding and determine what portion of each asset belongs to the marital estate.

Timing Matters Most

Pre-marital trust funding: Sarah created a revocable trust six months before her wedding and funded it with a $300,000 inheritance from her grandmother. These assets remained her separate property throughout the marriage. However, when Sarah and her husband purchased their family home using joint savings and added it to her trust, that property became marital property despite being titled in Sarah's trust name.

During-marriage funding: Assets moved into trusts during marriage using marital funds typically become marital property. This includes salary deposits, joint investment accounts, and property purchased with combined resources.

Jointly-Funded Trusts vs. Individual Trusts

Joint trusts created by married couples present the clearest case—courts generally treat all assets as marital property unless one spouse can prove separate property contributions with clear documentation.

Individual trusts require more detailed analysis. Even though spouses maintain separate trusts, the funding source determines property classification. If you used joint checking accounts to fund your individual trust, those assets likely became marital property.

Business Assets and Real Estate Complications

Business owners face particular challenges when company assets sit inside revocable trusts. Consider Mark, who transferred his consulting business into a revocable trust two years into his marriage, hoping to protect it from divorce proceedings. The court determined that since the business grew substantially during the marriage through Mark's efforts and reinvestment of marital income, his spouse deserved a portion of the increased value.

Real estate presents similar tracing challenges. When separate property appreciates due to improvements made with marital funds or efforts, courts must calculate what portion of the increased value belongs to the marital estate.

Practical Steps to Handle Your Trust During Divorce

Once divorce proceedings begin, you'll need to make several critical decisions about your trust structure and management.

Should You Revoke or Modify Your Trust?

Don't act hastily. Many divorce decrees include automatic restraining orders preventing either spouse from disposing of assets or changing beneficiary designations. Modifying your trust without court approval or spousal consent could constitute contempt of court.

Coordinate with your legal team. Your divorce attorney should review your trust documents early in the process. They'll need to understand what assets the trust contains and how those assets should be classified.

Consider temporary modifications. Some couples agree to modify their trusts during proceedings to reflect new living arrangements—such as changing which spouse has the right to live in the family home held in trust.

Working With Multiple Attorneys

You'll likely need both a divorce attorney and an estate planning lawyer. Your divorce attorney focuses on property division and settlement negotiations, while your estate planning attorney ensures your trust modifications comply with state trust laws and achieve your long-term goals.

Communication is key. Make sure both attorneys understand the complete picture. Share your trust documents, funding records, and any amendments with both legal teams.

Changing Trustees and Beneficiaries

If you and your spouse served as co-trustees, you'll need to address trustee succession. Options include:

• Appointing a neutral third party as trustee
• Dividing trust assets and creating separate trusts
• Having one spouse buy out the other's interest

Beneficiary changes typically wait until after the divorce finalizes, but you should plan these modifications in advance. Remember that minor children may remain beneficiaries regardless of your relationship changes.

Post-Divorce Estate Planning

Once your divorce is final, completely review your estate planning documents. Many people need to:

• Create entirely new trusts reflecting their post-divorce circumstances
• Update beneficiary designations on retirement accounts and insurance policies
• Revise powers of attorney and healthcare directives
• Adjust trustee and successor trustee appointments

Planning Ahead: Protecting Future Relationships and Assets

Learning from divorce experience, many people want stronger asset protection in future relationships.

Irrevocable Trusts for Enhanced Protection

Irrevocable trusts offer genuine asset protection because you permanently give up control over trust assets. However, this protection comes with significant trade-offs—you can't easily access trust principal or modify terms if circumstances change.

Domestic asset protection trusts available in states like Nevada and Delaware provide a middle ground, offering substantial protection while maintaining some flexibility.

Pre-Marital and Post-Marital Strategies

Before remarriage, consider moving separate property into irrevocable trusts. This removes assets from your personal estate and provides clear documentation of separate property intent.

Prenuptial agreements should specifically address existing trusts and outline how trust assets will be treated during marriage and potential divorce. Without clear prenuptial language, trust assets may still become subject to division.

Second Marriage Considerations

Blended families require especially careful trust planning. You might want to:

• Maintain separate trusts for assets intended for children from previous relationships
• Create new joint trusts for assets acquired during the new marriage
• Use qualified personal residence trusts (QPRTs) for family homes
• Establish generation-skipping trusts if you have grandchildren

Coordinating Trusts with Other Agreements

Postnuptial agreements can clarify trust asset treatment after marriage has already begun. These agreements prove particularly valuable when one spouse receives a large inheritance or when business values increase significantly.

Buy-sell agreements for business owners should coordinate with trust provisions to ensure smooth operation if divorce affects business ownership structure.

The key lesson from divorce and trust planning is that legal trusts explained simply are not magic shields. Revocable trusts serve important estate planning functions—avoiding probate, providing privacy, and enabling incapacity planning—but asset protection during marriage isn't one of them. Understanding this limitation helps you make informed decisions about trust funding and structure, whether you're creating your first trust, going through divorce, or planning for future relationships.

Proper planning means working with qualified professionals who understand both family law and trust law in your state. The investment in quality legal advice upfront can save substantial costs and emotional stress if relationships change down the road.