A specific type of trust, when established as part of a marital dissolution agreement, involves the creation of a fiduciary arrangement that cannot be altered or terminated by the grantor after its establishment. This arrangement typically involves transferring assets into the trust, with a designated trustee managing those assets according to the trust’s terms for the benefit of specified beneficiaries, often children of the divorcing couple. As an example, consider a situation where a couple divorces and, as part of the settlement, the family home is transferred into such a trust, with the ex-spouse residing in the house and the children ultimately inheriting the property upon a specified event, such as the ex-spouse’s death or remarriage.
The primary advantage of employing this structure within a separation agreement lies in its ability to provide security and protect assets. It can shield assets from future creditors or liabilities of either former spouse and ensure that assets are ultimately distributed according to the intended wishes of the parties involved at the time of the divorce. Historically, these arrangements have been utilized to safeguard funds earmarked for children’s education or to provide a stable financial foundation for a spouse, minimizing the risk of mismanagement or dissipation of assets. This fixed framework can also reduce future conflicts between the former spouses regarding asset distribution.
