Trust Assets in Colorado Divorce
People assume trusts are untouchable in divorce. That’s an oversimplification that can burn you on either side of the case—whether you’re the beneficiary trying to protect the assets or the spouse trying to reach them.
The reality in Colorado is more textured than “protected” or “not protected.” It depends on the type of trust, who created it, how it’s been used, and whether the assets have been mixed with marital money.
Revocable Trusts
If you created a revocable trust and you have the power to revoke it, amend it, or access the assets at will—the court generally treats those assets the same way it would treat assets you own directly. A revocable trust isn’t a shield in divorce. It’s a convenience for estate planning, not a protection strategy.
Irrevocable Trusts
Third-party irrevocable trusts—set up by parents, grandparents, or other family members—are more protective. If the trust was created and funded by someone else, and the beneficiary has no control over distributions, the corpus is generally not divisible. But “generally” is doing a lot of work in that sentence.
If the beneficiary spouse has been receiving regular distributions that funded the marital lifestyle—mortgage payments, tuition, vacations—the court may treat those distributions as income for purposes of maintenance and child support. The trust itself isn’t divided, but the income stream from it absolutely gets considered. And if trust funds have been deposited into joint accounts or used to acquire marital assets, the commingling argument opens the door to division of those specific assets.
FLPs, LLCs, and Other Structures
Wealthy families often hold assets through family limited partnerships, LLCs, and multi-generational planning structures. These can create legitimate valuation discounts for lack of marketability or minority interest—reducing the apparent value of a spouse’s interest. They can also create layers of complexity that make it harder to identify what’s actually there. Each entity has to be analyzed individually.
Trust issues in divorce require an attorney who understands both family law and trust law. At Burnham Law, we work with estate planning professionals and financial experts to ensure trust assets are properly analyzed—whether you’re trying to protect them or reach them.