Divorce touches nearly every part of your financial life, and your estate plan is no exception. If you created a trust during your marriage, you may be wondering whether it still holds up once your marriage ends, who controls it now, and whether your former spouse still stands to benefit. These are fair and important questions, and the answers depend on the type of trust you have, how it was written, and what Texas law says about your situation.
If you are going through a divorce and are concerned about your trust or estate plan, do not wait to get answers. Contact us today through our online contact form or call (972) 945-1610 to speak with someone who can walk you through your options.
Understanding the Basics: What Is a Trust?
A trust is a legal arrangement in which one person (called the grantor or settlor) transfers ownership of assets to a trustee, who manages those assets for the benefit of one or more beneficiaries. Trusts are commonly used to avoid the public court process known as probate, to protect assets, and to control how and when property is distributed to loved ones. When a married couple creates a trust together, the terms of that trust can become complicated once the marriage ends.
Revocable vs. Irrevocable Trusts: Why the Difference Matters in a Divorce
Not all trusts are built the same, and the distinction between a revocable living trust and an irrevocable trust is especially important when a divorce is on the table.
Revocable Living Trusts
A revocable living trust is one that the grantor can change, amend, or cancel at any time during their lifetime. Many married couples create a joint revocable living trust to hold their shared assets. During a divorce, this type of trust becomes a central focus for several reasons.
Because the assets in a revocable trust are still considered owned by the grantor, a Texas court can treat those assets as part of the marital estate, meaning they could be subject to property division. In Texas, courts divide marital property in a way that is "just and right," which does not always mean a 50/50 split but rather an equitable distribution based on the circumstances of the couple. If the trust holds community property — that is, assets acquired during the marriage — those assets will generally be on the table during divorce proceedings.
Irrevocable Trusts
An irrevocable trust, by contrast, is one that generally cannot be changed or dissolved once it has been established. Assets placed into an irrevocable trust are typically no longer owned by the grantor and are therefore often shielded from property division in a divorce. However, the specific terms of the trust and when it was created can still influence how a court views those assets. If the trust was set up primarily to hide assets or avoid a spouse's legitimate claim, a court may look more closely at it.
What Happens to a Joint Revocable Trust in a Texas Divorce?
When a married couple creates a joint revocable trust together, both spouses typically serve as co-trustees and co-beneficiaries. Once divorce proceedings begin, this shared arrangement can become legally and practically complex.
Under Texas law, the divorce decree — the final court order that legally ends the marriage — can address trust assets directly. The decree may order the trust to be dissolved, divided, or restructured. In some cases, one spouse may be required to transfer their interest in the trust to the other. If the trust holds real estate, retirement accounts, or business interests, the court will generally determine how those specific assets are handled.
It is also important to note that Texas has what is known as a revocation by divorce statute. This law automatically revokes certain provisions of an estate plan that benefit a former spouse once a divorce is finalized. However, this protection has limits, and it does not apply to all types of trusts or all beneficiary designations. Relying on automatic revocation without reviewing your documents is a risk not worth taking.
Does Divorce Automatically Remove Your Ex-Spouse as a Beneficiary?
This is one of the most common questions people have, and the answer is not always as clear-cut as you might hope. Texas law automatically revokes some beneficiary designations for a former spouse after a divorce, but this protection is not universal.
Here are some situations where your ex-spouse could still be entitled to trust benefits even after a divorce:
- The trust is held in a state that does not have automatic revocation laws for trusts
- The trust is an irrevocable trust that was created before or during the marriage with your spouse, named as a permanent beneficiary
- The trust involves assets governed by federal law, such as certain retirement accounts, which follow their own rules
- The divorce decree does not specifically address the trust or its terms
- You failed to update the trust documents after the divorce was finalized
Because of these exceptions, it is critical to review your estate plan carefully as soon as divorce becomes a reality, not after it is finalized. Waiting too long can leave your former spouse in a position to benefit from assets you intended to leave to your children or other loved ones.
Steps to Take With Your Trust During and After a Divorce
Divorce is a process, not a single event, and your estate plan should be revisited at each stage. Here are key actions to consider:
- Consult with a Plano estate planning attorney as soon as divorce proceedings begin to understand how your trust is affected under Texas law
- Review all trust documents to identify your former spouse's roles, including trustee, successor trustee, and beneficiary designations
- Work with your divorce attorney and estate planning attorney together to make sure the divorce decree specifically addresses the trust and its assets
- After the divorce is finalized, formally amend or restate your revocable trust to remove your former spouse and update your beneficiary designations
- Create or update your broader estate plan, including your will, powers of attorney, and healthcare directives, to reflect your new circumstances
Taking these steps in order helps ensure that nothing falls through the cracks during an already overwhelming time. Each document in your estate plan is connected to the others, so updating just one and not the rest can create gaps that may be difficult to fix later.
Protecting Children's Interests Through a Trust After Divorce
If you have children, a trust can actually be a powerful tool for protecting their inheritance after a divorce. A carefully written trust can ensure that assets set aside for your children remain separate from any future relationships or financial decisions made by your ex-spouse.
For example, you may be able to establish a new trust that names an independent trustee — someone other than your former spouse — to manage assets on behalf of your children until they reach a certain age. This gives you peace of mind that funds meant for your children will be used for their benefit rather than being controlled by someone whose financial interests may no longer align with yours.
What About Trusts Created Before the Marriage?
If you created a trust before you were married and that trust holds separate property — assets you owned before the marriage — those assets are generally not subject to division in a Texas divorce. However, the lines can blur if marital funds were deposited into the trust or if your spouse contributed in ways that commingled separate and community property. Keeping clear financial records throughout your marriage is one of the most effective ways to protect pre-marital assets.
Talk to a Plano Estate Planning Attorney About Your Trust and Divorce
Divorce is one of the most significant life events you will ever face, and it raises real questions about your financial future and the safety of the assets you have worked hard to build. Your trust is not automatically protected just because it exists, and your estate plan will almost certainly need to be updated to reflect your new reality. Reviewing your trust during and after a divorce is not just a legal formality — it is one of the most important steps you can take to protect yourself and your family going forward.
At Crain & Wooley, we work with people in Plano and the surrounding North Texas area who are navigating these exact challenges. We are here to help you understand what your current trust documents say, how Texas law applies to your situation, and what changes need to be made so that your estate plan reflects your wishes accurately. Whether you need to update an existing trust, create a new one, or take a comprehensive look at your entire estate plan, our team can walk you through the process clearly and without unnecessary complexity.
Reach out to Crain & Wooley today through our online contact form or call us at (972) 945-1610 to schedule a consultation with a Plano estate planning attorney and take the first step toward securing your future.