As I previously posted here, “Dynasty Trusts” are estimated to hold up to $100 billion in assets. Dynasty trusts are only one subset of the trust options available to families. And as more and more of those families formalize their estate planning with the use of trusts for their children, more and more of those trusts will be targeted in divorce proceedings. Whether you represent a trust beneficiary considering a prenuptial agreement or a divorcing spouse attempting to shield his or her trust assets from Florida’s equitable distribution regime (i.e., 2004->Ch0061->Section%20075#0061.075″>F.S. § 61.075), you need to know what the key issues are. Step one, read the 1985 landmark Florida Supreme Court opinion Bacardi v. White, 463 So.2d 218 (Fla. Jan 31, 1985). Step two, read Colorado trust & estates attorney Marc A. Chorney’s recent Real Property, Probate and Trust Journal article entitled “Interests in Trusts as Property in Dissolution of Marriage: Identification and Valuation.” Here is the editor’s synopsis of this article:
When a trust is included as part of the divisible assets of a divorce, many complex issues associated with division and valuation of the trust arise. As the author discusses, such a division and valuation may be contrary to the settlor’s intent and may require input from family members. This Article discusses the division of interests in trusts and the valuation of those interests, with the primary focus by way of example on the relevant Colorado law. Estate and gift tax valuation concepts also are discussed, and the author suggests that these concepts might be useful in valuing the interests of trusts at the dissolution of marriage. The Article concludes with a discussion of selected tax consequences of the division and valuation of a trust at the dissolution of marriage.