What Happens to a Trust in a Divorce in Missouri?
Nothing automatic. What happens to a trust in a divorce turns on two questions, whether it is revocable or irrevocable, and whether you created it or somebody else did.
Those two questions make four situations, and they behave very differently. A revocable trust you set up yourself is not the same problem as an irrevocable trust your parents set up for you, and a trust funded with marital money is not the same problem as a discretionary trust funded by a third party.
If the language feels impenetrable, that is normal. Trust drafting is written for trustees and tax lawyers, not for somebody reading it in the middle of a divorce. The work is always the same three steps. Identify the structure, trace the property, and find out what a Missouri court can actually consider.
Why Does Revocable or Irrevocable Matter So Much?
Because a revocable trust is generally not a shield when the divorcing spouse created or controls it.
Section 456.5-505.1 RSMo provides that during the settlor’s lifetime, property in a revocable trust is subject to claims of the settlor’s creditors, whether or not the trust contains a spendthrift provision.
Three things follow from that sentence.
- A spendthrift clause does not change it. The statute says so in its own words, which is unusual and worth knowing
- It reaches the trust property itself. Not only money already distributed out of it
- It applies during the settlor’s lifetime, which is when every divorce happens
So what happens to a trust in a divorce begins with that one distinction, and a great many arguments never get past it. That does not make every trust asset marital. Classification is still a source question under Missouri’s marital property statute. What it means is that putting property into a revocable trust generally does not change the underlying analysis, and most family revocable trusts were built for probate avoidance rather than for anything to do with divorce.
What Is the Classification Question?
Where the property came from. Not what the trust is called and not whose name is on it as trustee.
Section 452.330 RSMo presumes that property acquired during the marriage and before a decree of legal separation or dissolution is marital, regardless of how title is held. The same statute carves out property acquired by gift, bequest, devise or descent, and property received in exchange for premarital property or for property acquired that way.
So the sequence runs in one direction.
- Look through the trust to the property actually at issue
- Find out when and how it entered the trust
- Identify the source as marital, premarital, inherited or gifted
- Support it with records, because the presumption runs the other way until you do
Missouri follows a source of funds approach. In Hoffmann v. Hoffmann, 676 S.W.2d 817 (Mo. banc 1984), the Supreme Court of Missouri held that “the source of funds theory is the preferable method to apply in Missouri” and that “under the source of funds rule, the character of the property is determined by the source of funds financing the purchase.”
One asset can therefore hold both a marital and a separate interest at the same time. A trust does not remove the need to trace them apart.
What Happens to a Trust in a Divorce If Your Parents Set It Up?
Then you are a beneficiary rather than the settlor, and the property your parents put in may sit inside the gift, bequest, devise or descent exception.
Section 452.330.2 RSMo carries that exception, and it is the starting point. The trust terms then decide how much further the protection goes.
Section 456.5-504.1 RSMo provides that a beneficiary’s interest subject to the trustee’s discretion does not constitute an interest in property or an enforceable right. That holds even where the discretion is expressed through a distribution standard, and even where the beneficiary serves as trustee or cotrustee. Section 456.5-504.3 RSMo applies the rule whether or not the trust contains a spendthrift provision.
There is a support caveat and it is a large one. Missouri handles maintenance and support claims separately. Section 452.140 RSMo provides that property is not exempt from attachment or execution in proceedings for maintenance or to enforce certain support orders.
So a discretionary trust can sit outside a property division argument and still be looked at in a maintenance or child support argument. Those are not the same question and they do not get the same answer. Our FAQ on whether a spouse can reach a discretionary trust for support takes that apart in full.
How Do You Know If Your Interest Is Discretionary?
By reading the distribution language, not the name on the cover.
Section 456.5-504.4 RSMo points to the definition of a mandatory distribution in Section 456.5-506.1 RSMo, which defines it as “a distribution of income or principal which the trustee is required to make to a beneficiary under the terms of the trust, including a distribution upon termination of the trust.”
The whole thing can turn on may against shall. A trust that permits distributions for health, education, maintenance and support can still be discretionary if the trustee keeps real judgment about whether to make them.
Somebody has to read the complete instrument and every amendment. A summary, a statement, or a family member’s account of what the trust does will not show you the clause that decides it.
What If You Created the Trust With Marital Money?
Then it was marital money before it went in. Moving it changed the container, not the source.
Section 452.330.2 RSMo does not list transferring property into a trust as one of the ways property becomes separate. The court may still have to work out whether the trust holds marital property, separate property or a mix of both.
For a revocable trust, Section 456.5-505.1 RSMo keeps the property exposed to claims against the settlor during their lifetime. An irrevocable trust takes a longer look at the terms, the funding, what rights the settlor kept, and any spendthrift language. Our FAQ on an irrevocable trust in a divorce settlement covers that review.
A recent transfer gets a harder look than an old one. Section 456.5-505.3 RSMo recognizes an exception where a conveyance to an irrevocable trust was fraudulent as to creditors under Chapter 428, and the eleven factors in Section 428.024 RSMo can come into play.
That is not a suggestion that every transfer was improper. It is a statement that timing, purpose, control and financial effect all become questions once a divorce is on the horizon. Our FAQ on putting a house in a trust before divorce covers the same ground for real estate.
Can a Court Order a Trust to Do Something?
It depends entirely on whose trust it is and what kind of interest the beneficiary holds.
If you created a revocable trust, the property stays connected to you during your lifetime under Section 456.5-505.1 RSMo. The trust form on its own does not put daylight between you and the assets.
A third party discretionary trust is a different animal. Under Section 456.5-504.1 RSMo, a creditor or other claimant may not attach present or future distributions, force a judicial sale of the interest, compel the trustee to distribute, or reach the interest by other means. The statute keeps that true even where the trustee has abused their discretion.
The remedy exists, it just belongs to somebody else. The beneficiary can bring a proceeding against the trustee for abuse of discretion or failure to follow a distribution standard under Section 456.5-504.2 RSMo. That is the beneficiary’s right. It does not hand the same right to a claimant.
Can Your Spouse Get Information From the Trustee?
Where distributions are solely discretionary, Missouri says no, and that provision surprises people on both sides.
Section 456.5-504.5 RSMo provides that a creditor or other person making a claim against a beneficiary is not entitled to information about trust assets or trust records where distributions are solely within the trustee’s discretion.
Two conditions have to hold. There has to be a claim against the beneficiary, and the distributions have to be solely discretionary. A mandatory distribution changes the analysis under Section 456.5-506 RSMo.
The limit runs during the term of the trust, and it holds even where the beneficiary may eventually take trust property as a remainder beneficiary.
Does Divorce Change Trust Benefits for a Former Spouse?
Usually yes, automatically, and there are five ways out of it.
Section 456.1-112 RSMo revokes any beneficial term of a trust in favor of the settlor’s former spouse, and any fiduciary appointment of that former spouse, when the marriage is dissolved or annulled. The trust is then read as if the former spouse had died immediately before the dissolution became final.
Note the word settlor. This reaches a trust you created, not a trust your parents created naming your spouse.
The exceptions are worth knowing because they are broader than most summaries admit. The interest or appointment was created after the dissolution. The trust expressly says dissolution does not affect the designation. A court order or a binding settlement agreement between the parties says otherwise. A gift tax marital deduction was claimed under Section 2523 of the Internal Revenue Code. Or applying the section would produce an incomplete gift or gross estate inclusion for federal tax purposes.
The trust document and the divorce agreement have to be read together. Reading one without the other is how the wrong person stays named.
What Should You Bring to a First Conversation?
The complete trust instrument. Almost every useful answer starts there and very few start anywhere else.
- The instrument and every amendment, not a summary or a certificate of trust
- Who is who. Settlor, trustee and beneficiaries
- The dates. When the trust was created, and when any irrevocable status began
- The funding history, showing what went in and when
- Accountings and distribution records, plus what the distributions were spent on
If a distribution landed in a joint account, that opens a tracing question on its own, and our FAQ on whether a commingled inheritance is still yours covers it.
The burden is the demanding one. In Blydenburg-Dixon v. Dixon, 277 S.W.3d 815 (Mo. App. W.D. 2009), the Western District held that “because of the statutory presumption that property acquired during marriage is marital, non-marital property must be proven by clear and convincing evidence.” Records carry that. Recollection does not.
What Does the Trust Not Decide?
Three things, and the trust document has an opinion about none of them.
It does not decide classification. That is the source question under Section 452.330 RSMo and Hoffmann, and it is answered by where the money came from rather than by what the instrument says.
None of that is answered by the instrument. It does not decide division. Section 452.330.1 RSMo has the court set apart each spouse’s nonmarital property and divide the rest “in such proportions as the court deems just,” expressly weighing the value of the nonmarital property set apart to each spouse. So separate trust property can stay separate and still shape how everything else is divided.
And it does not leave the door open afterwards. Section 452.330.5 RSMo makes the property division “a final order not subject to modification,” with a narrow carve out for qualified domestic relations orders. Our page on property and asset division covers what that allocation involves.
Who Can Help With a Trust in a Missouri Divorce?
Nearly every useful answer here comes out of the actual instrument. The expensive mistakes come from guessing at the trust’s name, or assuming that every trust gets treated the same way, and both happen constantly.
Bardol Law Firm practices only family law, in St. Louis County, St. Louis City, St. Charles County and Jefferson County. We handle classification, tracing and property division where a trust is in the picture, and we work alongside your own estate and tax advisors rather than replacing them, because we do not draft trusts or give estate planning or tax advice. You can read more about whether a trust protects assets in a divorce, about high net worth divorce, and about the rest of our family law questions and answers.
You should not have to work out on your own whether a document your parents signed twenty years ago is about to matter. Every client here has a named paralegal on the file, and we generally return calls within one business day.
Family Law, Simplified.
Bring the instrument, the amendments, the funding records and the distribution history, and the first conversation gets a great deal further. Contact Bardol Law Firm or call 314.918.0100.
This page is general information about Missouri law and is not legal advice. Every case turns on its own facts. The choice of a lawyer is an important decision and should not be based solely upon advertisements.