Why it is important to consider appointing a trust or trustee for your assets
A trust or trustee is an important entity when it comes to managing your will, even when you are undergoing a divorce. Although it may not be that popular in Malaysia, having a trust or trustee will be beneficial for you in the long run.
Definition of a trust
A trust, according to Investopedia, is a fiduciary relationship between the trust and another party. The trust will appoint a trustee (or the client may appoint one themselves) for the client. An appointed trustee will ensure that the client (called beneficiary) will get the assets as stated in the deceased’s will. A trustee controls the property and money for the owner when he or she has passed away.
How can your marriage and divorce affect your will?
Typically when you get married, you should have an update on your will that falls under a “contemplation of marriage” clause – or anything related to mentions of marriage. However, whether you did include a marriage and divorce clause or not, your will is still valid.
Even when you have divorced, your existing will is not cancelled. Your ex-spouse will have an effect on your will. They will no longer act as an executor or inherit anything from your will.
Some married couples may choose to judicially separate rather than divorce (read: separation). A separation is not a divorce and does not terminate the divorce. It does not have any effect on your will.
How a Trust or Trustee Can Protect Your Assets in a Divorce?
As mentioned before, trust or trustee is an appointed entity to uphold your will’s contents. The trust or trustee will make sure whatever is listed in your will goes to the beneficiaries. A trustee’s role in your will when you are undergoing a divorce is still pretty much the same. There are very little to no changes in a trustee’s role in your will.
a. Trust and trustees still ensure your will’s clauses are carried out
Even if you did not name your spouse in your will, the appointed trustee will still ensure that the named beneficiaries get the promised assets as named. However, there will be circumstances when you have named your spouse in your will. That was done during a period of time when you and your spouse were very much in love with each other.
However, in the event of a divorce, how will you handle the problem? We have mentioned before, you will have to include marriage and divorced clause in your will. In simple words, you will need to be very black and white in your will about what’s going to happen to the assets when your spouse is the beneficiary.
If your spouse is named a beneficiary, you will still need to give the named assets and money when you have passed away. Even when you have divorced and passed away. So in other words, a trust or trustee can do nothing much but to ensure the named assets and money goes to your ex.
b. Tracing of any unnamed assets
Some people may keep some accounts and properties in the dark from their spouse. They may do it deliberately or they may have forgotten about it. However, if you are to undergo a divorce and have unnamed assets, the family and divorce court may have to trace it. Your trustee may or may not need to assist in the tracing.
As painful as the situation gets, you can never run away from the courts when it comes to asset distributions. When the court has traced and located the asset, it will be distributed accordingly. Even if it is for your divorced spouse.
However, tracing can have 2 purposes in a divorce:
–Just to locate assets: this is to prove that marital assets exist. These assets are tied to your marriage and you may have to divide it up upon divorce. It’s relevant when your spouse is not disclosing the extent of the available assets for distribution.
–Separate assets: this one is to make sure the assets traced are bought before you and your spouse got married. Upon divorce, it is less likely your ex is able to get their hands on it.
c. Making a newer will
Your trustee may be named in your latest will, which is going to revoke the last will you had. It did not matter if the latest will has a revocation will. As long as it exists and is legitimate, then the last one will mean nothing.
A testator can also revoke a will by making a written statement of their intention. This has to be done and signed in the presence of 2 witnesses. Mind you, if this is the case, it means the current appointed trustee of your last will may have no power over your latest will unless they are named one.
In conclusion, we can say that the future is uncertain. Due to the uncertainties, it’s best that spouses include a revocable clause in their trusts and wills. It’s always best to keep your options open so you will not be tied down or cornered by a bad decision in life.