Divorce in Idaho & Trust Funds

by Cindy Chung
A trust fund may affect the negotiations in an Idaho divorce.

A trust fund may affect the negotiations in an Idaho divorce.

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When a husband and wife divorce in Idaho, they often need to resolve many legal issues, including property division. If either spouse has a trust fund, both spouses should understand how a trust fund can affect property rights according to the state's divorce laws. Each spouse might need to consult with an attorney who practices domestic relations law in Idaho before attending court for divorce proceedings or negotiating a divorce settlement.

Community Property Laws and Idaho Divorce

Idaho is one of the states following community property principles in the event of a divorce. In general, all property earned or acquired by either spouse during marriage becomes community property. Property earned or acquired before marriage, as well as property gained by gift or inheritance during marriage, generally remains the separate property of one spouse unless proven otherwise. In addition, Idaho state laws make an exception for net income generated during marriage from a source that is separate property.

Classification of Trust Fund During Divorce Case

If the court characterizes any income or assets generated from a trust fund as community property, that property might be divided between a husband and wife even if the trust fund generally remains separate property belonging to one spouse. The classification of the trust fund as community property or separate property may depend on the date of establishment, type of trust, source of trust assets and identities of trust beneficiaries. Both spouses may need to consult with attorneys who handle trust funds. Although a court must divide community property between the two spouses during a divorce case, the court does not generally divide separate property unless there is a compelling reason.

Distribution of Property During Divorce

In Idaho, property division during divorce requires a state court to apply community property principles. According to the state's community property laws, the court must make a "substantially equal division in value" for property divided between the husband and wife unless the court finds a compelling reason to make an alternative order. Although a trust fund may remain one spouse's separate property, a court may divide any net income from the trust fund, if any, that it characterizes as community property.

Effect of Premarital Agreement

If the couple signed a premarital agreement before marrying, Idaho state laws determine whether a court will uphold the agreement in a divorce case. An agreement may indicate that property, including a trust fund, be kept separate during divorce or require a particular division of property. However, the existence of a trust fund might affect the enforcement of the premarital agreement if the spouse with the trust fund did not fairly disclose the fund to the other party before the parties signed their agreement.

Trust Fund and Alimony

If a spouse has a trust fund, the other spouse might need to know whether the trust fund will affect alimony through the couple's divorce. Alimony, known as spousal maintenance in Idaho, depends on a number of factors reviewed by the state court during a divorce. A judge can only award maintenance if the spouse seeking alimony cannot provide independent support through employment and does not have sufficient property to generate income for living expenses. If a spouse could be financially independent through a trust fund, the court may be reluctant to award her alimony. In addition, a court must consider the amount of property received by each spouse during property division. Alternatively, the court may consider the financial resources of the spouse who would pay alimony; a spouse who has a significant income, including a trust fund, might appear to have sufficient resources to pay post-divorce alimony.