David R. Hartwig, ESQ.
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Trusts in Divorce -- Smith v. Smith

A new opinion discussing divorce and allocating a family trust has been released by the Utah Court of Appeals. The case involved a family trust created by husband and wife during their marriage. The trust purported to claim that any account, asset, or other item opened, obtained, or created during the marriage was to be marital property. However, there was a provision that wife had certain property as her own.

Prior to the divorce, wife received an inheritance, and placed the funds in a separate account. The divorce followed and the trial court awarded the separate account to wife. Husband appealed, claiming that under the general terms of the family trust, the account was marital property and he should have been awarded a portion of it.

The key turned out to be the specific provision of the family trust that specified that all interests in wife's family holdings was wife's separate property. The lesson to take away from this is that when one is attempting to generally define rights in a trust to ensure that all of the specific provisions are consistent. This case also reinforces the fact that any such questions will be determined under contract principles.

The case is Smith v. Smith

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