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Divorce and My Trust: Will I Lose Property?

Millions of people around the world long to find a partner and look forward to a marriage that will last a lifetime. Human beings desire to love and to be loved. Along the path of life prior to marriage, people acquire property. Some property is bought, some property is inherited, and some is simply given to us. The amount of property one has prior to marriage ranges quite widely. Several factors contribute to this. Marriage happens quickly for some. For others, it takes time. Some are good at limiting the amount of property they have, but many have what seems like an endless amount! Then after marriage, property is acquired as a couple. What happens to this property in the case of divorce? Do I get to keep what I had before? Does my ex-spouse own half of it? What if it has been put into a trust? This article explains what happens with property in a trust when a divorce occurs. The experienced probate attorneys at Lee Kiefer & Park, LLC, can help you navigate this complicated issue.

The attorneys at Lee Kiefer & Park, LLC, have a wealth of probate experience. Managing partner Kennedy Lee has practiced trust and estates law in Nevada since completing law school in 2011. Mr. Kiefer and Mr. Park focus their practice on litigating matters related to trust and estate administration. Mr. Lee and partner Matthew Park carry the highest possible rating from the prestigious Martindale-Hubbell per-based lawyer rating service. The three partners experience is complimented by that of Suzanne Fitts, a 1989 law school graduate who serves the firm as of counsel.

In general, Nevada law dictates that any property gained during the course of a marriage, using the couple’s income, is owned jointly. This is called Community Property. One half of each item of community property is owned by each spouse respectively. Property brought into the marriage remains the separate property of the spouse who owned it previously. Additionally, any property inherited during the course of the marriage is the separate property of the spouse who inherited the property.

The Nevada Supreme Court addressed this issue in Colman Family Revocable Living Trust v. Collier, 460 P.3d 452, (2020).

“NRS 111.781 provides that unless “otherwise provided by the express terms of a governing instrument,” any revocable dispositions of property to a former spouse, including those made pursuant to a trust, are automatically revoked upon divorce.”  Further, “NRS 111.781(3) provides that upon revocation of the disposition to the former spouse, the remaining trust provisions are given effect as if the former spouse had disclaimed his interest.” If not specifically stated in the Trust, upon divorce, the property remains the separate property of the spouse and the rest of the Trust remains in force.

In Colman, Prior to Paul and Chari’s marriage, Chari purchased a piece of property. Paul and Chari lived in the home during their marriage. Paul and Chari created a Trust. Paul and Chari were the primary beneficiaries of the Trust. After both of their deaths, the Trust mandated that Tonya Collier would become the beneficiary of the home. Chari transferred the property to the Trust but did not change the character of the property to community property.

Paul and Chari divorced but remained living at the property. Chari died one month after the divorce. At that point, Ms. Collier claimed that the divorce precluded Paul from claiming the property, and that the home was still Chari’s separate property. The Court found that Ms. Collier was the rightful beneficiary to the property. No other document existed to show that Chari had a desire or an intent to let Paul remain a beneficiary of the property.

To show that the property changed from separate property to community property, Paul would have needed to produce clear and convincing evidence that either he or joint funds contributed to the purchase of the property or that he or joint funds had contributed to improvements to the property that increased its value. Paul presented no such evidence. The rest of the Trust did remain in force. The facts of this case made it so the property remained the separate property of Chari and thus, upon her death, became Ms. Collier’s. This does not always work out so nicely. Sometimes, litigation may be needed to solve these issues.

It is vitally important to consult with an attorney in order to make your intentions clear. If you find yourself in the same predicament after divorcing, you should contact Lee Kiefer & Park, LLC, for a free consultation, either by using the online form or by calling 702-333-1711.

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