New York Court Rules Irrevocable Trust Assets Can Be Marital Property

Full analysis

In a New York case of first impression — meaning no prior court in the state had ruled on this exact question — a court held that the full value of assets held in an irrevocable trust created during a marriage could be included in the marital estate and divided between spouses. The court cited two reasons: the couple had used the trust assets to fund their lifestyle and the wife reasonably expected to benefit from them in the future; and the husband had never truly given up control over the trust assets.

This matters for anyone who has placed assets into an irrevocable trust — a trust that normally cannot be changed or taken back — during a marriage, believing those assets were permanently shielded from a future divorce settlement. The ruling suggests that if a spouse retains practical control or the couple treats the trust as a household resource, a court may still count it as marital property subject to division.