April 1, 2026
Is a Trust Property that a Court Can Divide Up in a Divorce?
Is a Trust Property that a Court Can Divide Up in a Divorce?
Question.
Can a court treat a trust as property and divide up the trust assets between divorcing spouses?
Answer.
It depends.
Netter v. Netter, Recent Case.
The recent Appellate Court case of Netter v. Netter, 235 Conn.App 774 (2025) provides guidance. But it also demonstrates that analyzing whether a trust is property for purposes of a division under the divorce laws in Connecticut can be a complex task. Netter v. Netter shows how reaching the proper legal conclusion can have a tremendous financial impact affecting both spouses for the rest of their lives.
Background. In Netter, Husband and his descendants (children, grandchildren, etc.) were the sole beneficiaries of a trust established by his father years before Husband and Wife married. Husband was a trustee and although he had some power to choose the trustees, he was not the only trustee. Wife’s expert valued the trust assets at $122,000,000.
During the marriage, while the marriage showed signs of trouble but before the legal divorce case started, Husband established three separate trusts and transferred millions of dollars of assets into these trusts. These trusts were self-settled which means he placed his assets into a trust for his sole benefit. He was the investment advisor to the trusts and the sole beneficiary. His descendants were not beneficiaires. Like Husband’s father’s trust, Husband was not the sole trustee. At trial it was established that the value of the assets in these three trusts was about $45,000,000.
Trial Court Decision. The trial court held that all four trusts, Husband’s father’s trust and the three self-settled trusts he’d established, were property within the meaning of Connecticut divorce law. The court ordered Husband to pay to Wife, as property division, $50,000,000 from his father’s trust assets and $50,000,000 from his self-settled trust assets. Husband appealed.
Appellate Court Decision. Husband’s appeal was partly successful and partly unsuccessful.
First, the Appellate Court affirmed the decision of the trial court that the assets in the three self-settled trusts were marital property. Therefore, the trial court had the authority to divide the assets between Husband and Wife. In other words, the court could order Husband to transfer some of the trust assets to Wife because they were his assets.
Second, it overruled the trial court with regard to the father’s trust reasoning that Husband’s interest was not a presently existing property interest. Connecticut then had no power to divide the trust assets between Husband and Wife. Simply put, the trust assets weren’t Husband’s. Among other points, the Appellate Court noted that the trustees other than Husband had the power to make distributions from the trust in their sole discretion. Even Wife’s own expert testified that all distributions had to be approved by the trustees other than the Husband.
Another Issue About Trusts and Divorce?
Look for the next blog post in April about trusts. Even if not property can a trust be considered for purposes of ordering alimony or child support?
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