Divorces involving significant wealth can inspire unique challenges, especially when dividing assets like inheritances. For high-net-worth individuals, one of the most complex aspects of a divorce may involve determining what portion of inherited wealth or trust assets is potentially subject to division. While Massachusetts follows equitable distribution laws, which aim for a fair—not necessarily equal—division of marital assets, the fate of trusts and inheritances is not always straightforward.
Many individuals assume that assets held in a trust or received through inheritance are automatically protected from division in a divorce. However, this is not always the case. Several factors can influence a court’s decision in the event that spouses cannot reach settlement agreement terms outside of court. Therefore, it is crucial to understand how these assets are treated under Massachusetts law.
When trust assets and inheritance become marital property
While Massachusetts law generally treats inheritances and trust assets as separate property, the situation becomes complicated if these assets have been intermingled with marital funds. For example, if inherited funds were deposited into a joint account or used to purchase joint assets, they may lose their “separate property” designation.
In high-asset divorces, courts will carefully examine how these funds were handled during the marriage to determine whether they should be included in the division of marital property.
The type of trust is also a factor. A revocable trust, which the grantor can alter or dissolve, may be considered less protected from divorce proceedings than an irrevocable trust, which cannot be changed once established.
Additionally, if a spouse has control or access to the trust during the marriage, the court may view assets in that trust as marital property. This is more practical if the trust was used to support the family’s lifestyle.
For high-net-worth individuals, wealth previously thought to be protected may suddenly be at risk in a divorce. With proper planning, such as keeping trust and inheritance funds separate from marital assets, individuals can increase the likelihood that these resources will remain intact. Ultimately, consulting with a financial and legal team is one of the best ways to handle this complex aspect of family law in Massachusetts.
