Mississippi Divorce and Trusts: How to Divide Assets

Divorces are undoubtedly challenging, especially when it comes to dividing assets. However, incorporating trusts into the mix can intensify the intricacies of the process. If you find yourself going through a divorce in Mississippi and have trusts that need to be considered, read on for valuable tips on how to navigate through the division of your assets with fairness and clarity.

Understanding Trusts in Mississippi Divorce: Unveiling the Layers

Trusts, legal arrangements where the trustor transfers assets to a trustee for management and distribution among beneficiaries, come in various forms each with its own set of rules and regulations.

Among the most frequently encountered trusts is the revocable trust, also known as a living trust. The trustor establishes this trust during their lifetime, retaining the right to modify or revoke it as needed. Individuals often opt for revocable trusts as they facilitate the efficient transfer of assets to loved ones, bypassing the time-consuming and costly probate process commonly associated with estate planning.

However, revocable trusts can also serve the purpose of safeguarding assets during a divorce. In certain instances, one spouse, acting as the trustor, may transfer assets into a trust to protect them from being divided within the divorce settlement. Such trusts are known as "divorce trusts."

In the context of divorce, the presence of trusts can complicate the division of assets, especially if they contain properties that would typically be considered marital, acquired during the marriage.

Determining the Nature of Property: Marital vs. Non-Marital

Mississippi courts employ a process called equitable distribution to divide property during divorces. This means that assets are divided fairly, though not necessarily equally. To determine fairness, the courts initially categorize assets as either marital or non-marital property.

Marital property encapsulates assets acquired during the marriage, alongside any increase in value that occurred during that period. Conversely, non-marital property includes assets obtained prior to the marriage, as well as gifts and inheritances bestowed upon a spouse during their union.

The presence of trusts creates a challenge in distinguishing whether the assets held within them belong to the category of marital or non-marital property, given that trusts can contain both.

Delving into Trust Documents: A Path to Clarification

When attempting to ascertain the classification of trust assets as marital or non-marital property, a careful analysis of the trust documents becomes essential. These documents may explicitly indicate whether the assets within the trust are intended to be treated as marital or non-marital property.

For instance, if a trust was established before the marriage and clearly designates the assets as non-marital property, they will likely maintain such classification during the divorce proceedings. However, if the trust’s intentions remain ambiguous or unclear, the courts may explore additional factors to determine the appropriate categorization of the assets.

Appraising Trust Assets: Unveiling Their Worth

Once the marital and non-marital properties receive their due identification, the subsequent step entails establishing the value of all assets. Determining the value of trust assets can prove particularly challenging, as they might encompass intricate items such as real estate, artwork, or intellectual property that are not easily valued.

In these situations, seeking assistance from a professional appraiser becomes vital to ascertain the fair market value of the assets. With the value properly assessed, the assets can then be divided in adherence to the equitable distribution principles.

Trustee Responsibilities: A Fiduciary Duty

It is worth highlighting that trustees bear a fiduciary responsibility to act in the best interests of the beneficiaries. Consequently, if one spouse establishes a trust with the intention of concealing assets from the other partner amid divorce proceedings, the trustee may be required to disclose those assets.

Failure on the part of a trustee to fulfill their fiduciary duty may result in their being held liable for any associated losses or damages. This can encompass a court-ordered distribution of trust funds to the opposing spouse.

Conclusion: Navigating the Path to a Fair and Equitable Asset Division

Dividing assets during a divorce is a complex ordeal, and the presence of trusts only amplifies the intricacies involved. If you are undergoing a divorce in Mississippi that involves trusts, it is crucial to grasp the regulations governing marital and non-marital property, diligently review trust documents, and ensure a fair appraisal of your assets. Through careful planning and the guidance of an experienced attorney, you can navigate the journey towards the division of your assets in an equitable and just manner.