This post will be a quick one to update my readers on an earlier post regarding how trusts used for asset protection hold up in divorce. In this earlier post, I made the argument that in New Jersey, to be on the safe side, when seeking to protect a child’s inheritance from a potential future divorce we should try to avoid placing “ascertainable standards” into trust distribution language. [For an explanation of what an "ascertainable standard" is and why I was worried, click here see the earlier post.]
It turns out that ascertainable standards in New Jersey trusts may now be OK after all. The New Jersey Supreme Court just released its opinion in Tannen v. Tannen which upholds the appellate court decision referenced in my prior post. This means it is now the law of the land in New Jersey that discretionary trusts (even those that make use of an ascertainable standard such as health, education, maintenance, and support) cannot be factored into an alimony award against a trust beneficiary.
This strengthens the divorce protection from trusts in this State, and makes it even easier for parents to protect their children’s future inheritances from a child’s potential future divorcing spouse or bad financial decisions.
The simple lesson to take away from this decision is that with proper planning with a qualified attorney, you can create a financial safety net for your loved ones after you’re gone that won’t be lost even if they find themselves in a messy divorce. Feel free to contact me if you’re interested in learning how to protect your heirs’ inheritances from divorce using trusts.
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