PLM Family Law

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Asset trusts at center of divorce battle

During a divorce, some surprising revelations may come to light, including evidence that one spouse might be trying to hide assets. North Dakota residents can create an asset trust in South Dakota that may accomplish this as can residents from throughout the world. South Dakota’s asset trusts offer so much protection from creditors, spouses and taxes that the state is sometimes referred to as the “new Switzerland.” The divorce of a billionaire couple in Texas has brought these trusts into prominence.

The woman in the case was aware that her husband had offshore trusts to protect his businesses from taxes, but she did not know he had placed most of the couple’s belongings in South Dakota asset trusts. While she was originally listed as the beneficiary, with divorce on the horizon, he moved the assets into new trusts that she could not access. This included not just major property the couple owned, such as yachts and homes, but also such personal items as jewelry and tableware. The woman learned that rather than half of more than $2 billion, she might only get half of the $12 million listed as the couple’s total assets.

She may be left with only enough to pay the millions she owes in legal fees. Meanwhile, strict privacy laws mean she and her attorney are struggling to get information about the trusts.

Texas is a community property state. This means that, in general, marital property is supposed to be divided equally in a divorce. While couples are often able to amicably reach a divorce settlement without going to court, the situation may become much more complex if one spouse is hiding assets. Another complication that can arise in a divorce and require litigation is if the individuals are parents, and one person feels the child is unsafe with his or her spouse.