Previously published in Philadelphia Bar Association Probate and Trust Law Section Newsletter, June 2017

What parent wants their hard-earned money getting distributed to a former daughter/son-in-law or a creditor of their child? In our estate planning practice, we have yet to meet such a parent.  Thus, we often recommend our clients (parents or grandparents) establish and fund a trust for the benefit of their children (or future generations).  One of the many benefits of establishing an irrevocable trust (in Pennsylvania or New Jersey) is that if properly managed the assets held in the trust are protected from creditors – Inclusive of a divorcing spouse.  Our family law colleagues have begun to erode this protection such that in some jurisdictions, an irrevocable trust with a spendthrift clause may become subject to equitable distribution or included in the calculation for alimony.  This article examines several recent divorce court cases in which one of the divorcing parties was the beneficiary of an irrevocable trust.  It concludes with some insight and recommendations for drafting and administering an irrevocable trust so that the trust assets do not become the property of the non-beneficiary former spouse. Continue Reading