The Sole and Separate Property Trust, hereafter S&SP Trust, are a significant planning device in four situations among clients. Our property trust attorney provides the best legal in San Diego.
1. Younger Clients: These Trusts are recommended for younger clients, pre-marriage. By their designation, they identify sole and separate property. They don’t replace a Pre-Marital Agreement but go along way in carrying out the intent of the owner in retaining the characteristics of sole and separate property when entering a marriage.
2. Divorced Client: Under California law, Trusts entered into during marriage are revoked by law on divorce. After the divorce we recommend that an individual create their own S&SP Trust for the assets awarded to them in the Final Divorce Decree. As a result, the assets will be titled as such should the individual enter a second marriage. Most divorced spouses truly understand the benefits of utilizing a S&SP Trust having experienced the rigors of a divorce action.
3. Asset Protection: Some spouses who are in marriages with spouses who are targets for lawsuits (doctors, architects, construction, owners, attorneys, etc.) chose to arrange a S&SP Trust in addition to the Family/Living Trust . If properly arranged, these Trusts can protect certain separate property from lawsuits against their spouse. This is especially true if a spouse receives a significant inheritance which may be utilized for financial security in later years.
4. The S&SP Trust is a device I utilize in my Protective Inheritance Trust (PIT) provisions of the Family/Living Trust . It is primarily utilized to protect a child’s inheritance from divorce proceedings and lawsuits against his/her spouse as indicated in paragraph 3 above.
What is a Sole and Separate Property Trust?
A Sole and Separate Property Trust is a Trust established for one individual to hold assets that are, or should remain, that person’s separate property, clearly distinct from community property in a marriage. In California, assets acquired during marriage are generally presumed to be jointly owned. A Sole and Separate Property Trust provides clear titling and documented ownership records that preserve the separate character of pre-marital assets, inheritances, gifts, and any other property the owner intends to keep outside the community property estate.
Does a Sole and Separate Property Trust replace a prenuptial agreement?
No. They serve related but different purposes. A prenuptial agreement is a contract between two spouses governing property rights if the marriage ends. A Sole and Separate Property Trust establishes clear titling and ownership records for your assets, independent of any prenuptial agreement. The two documents complement each other well. For younger clients approaching marriage with meaningful assets, Stephens Law Group often recommends both, because one does not eliminate the need for the other.
What happens to my Sole and Separate Property Trust after a divorce?
Under California law, marital Trusts created during a marriage are revoked by operation of law upon divorce. After a divorce, Stephens Law Group recommends establishing a new Sole and Separate Property Trust for the assets awarded in the divorce decree. This clearly documents the separate character of those assets going forward, which is important protection before entering a new relationship or remarrying. Most clients who have been through a contested divorce understand this value immediately.
How does this Trust protect assets if my spouse is sued by their creditors?
In California, a creditor who wins a judgment against one spouse can sometimes reach community property to satisfy that judgment. If separate assets have been deposited into joint accounts or titled as community property, they may be vulnerable. Holding separate property in a Sole and Separate Property Trust with clear title can isolate those assets from your spouse’s legal liabilities. This is particularly relevant when a spouse works in a field with high litigation exposure: medicine, construction, law, or business ownership.
How does this Trust work together with the Protective Inheritance Trust?
The two Trusts work as a combined inheritance protection strategy. When a child receives an inheritance under a Protective Inheritance Trust, one of the conditions is that the child establish their own Sole and Separate Property Trust to receive and hold those funds. This keeps the inheritance titled as the child’s separate property, not as community property, which protects it from their spouse in a divorce and from their spouse’s creditors in a lawsuit. Stephens Law Group uses this combination as a standard feature across its estate planning work.
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