My husband secretly set up a trust that includes our home. What should I do?

Instead of having a high-level job with bonuses and accolades, I ran one of his companies with no pay. I also drove his daughter’s carpool, allowed his adult son and his son’s children to move in with us, and ran our home in a smooth and efficient manner. I acted as a good steward of his assets so he could maximize his retirement and investments. I also added substantial assets to our portfolio with my “hobby” of real-estate investing.

I’m a team player and thought that upon retirement we would live the life we dreamed about during the early days of our marriage — I expected he would retire at 65 and we would travel the world. Our portfolio is worth 10 times what it was when we married. His retirement account and several IRAs were opened after we were married. 

Irrevocable trust for his children

He put everything, even our home and my investment properties, into a trust, with his friend as trustee. I had been the beneficiary of his retirement account, but now the trust is. I believe this change of beneficiary was forged. He invested in a company that stands to make a lot of money, and that investment was put into an irrevocable trust for his children only. His children have quit their jobs to create startups with funding from their dad. At 69, he feels he can’t retire because he’s helping his kids. 

I told him that if I outlived him, I would give everything I inherited from him to his children, and my assets would go to my family. When confronted about the trusts, he said he assumed I’d be OK with that because of my promise to give his assets to his kids. I’m not even a 50% beneficiary. I’m terrified his kids will boot me out of my home or declare me incompetent when I’m a little old lady just trying to sit on the beach. I don’t even have kids of my own to look out for me.   

He can’t understand why I’m upset. Now I’m nearing retirement age with no extra investments in my retirement account, no credit for the work I’ve done and no say in my assets. I don’t even have a work history for the past 10 years and can’t get a job. Is this even legal? If I bring an attorney in, it will ruin the marriage. I can’t even contest the will because it states if anyone contests the will, they will have nothing. 

With most things, I’m smart. But gosh, I’ve been so stupid. What are my options? 

Second-Class Wife

Dear Ex-Wife,

Secret trusts and a possible forgery do not constitute a healthy marriage.

There’s nothing stopping a spouse from setting up a trust during a marriage, but they should do so with separate assets. To set up a trust with separate assets without telling your spouse is bad manners, but to create a trust with both separate and marital assets, in secret, is a recipe for a legal battle and divorce court. Marital assets are those that are accumulated during the marriage.

Sometimes in life, you have to make a choice: You can stand back and allow your husband to squirrel away marital property and thereby “save” your marriage on paper — even though he has broken your faith in him and in the marriage. Or you can call a lawyer and perhaps a forensic accountant to examine the contents of the trust and trace their origins, and thereby risk your marriage.

“While there are legitimate reasons for a spouse to set up a trust during marriage, sometimes it is done in order to improperly shield assets from equitable distribution,” according to Jewell Law PLLC in New York. “Often, the non-beneficiary spouse is not aware of the trust or thinks the money came from another source such as a family member.”

Transparency is key to marital estate planning. “A trust set up in one spouse’s name can be considered separate property regardless of whether it is set up before or after marriage,” the law firm adds. “However, when it is created during a marriage, the non-beneficiary spouse must raise the question of whether any marital assets have been put into the trust.”

“This is a situation in which a prenuptial agreement could have been helpful to confirm — and protect — the rights of each spouse in the event of divorce or death,” says Neil V. Carbone, a partner at Farrell Fritz, P.C. ”State law governs a spouse’s inheritance rights. Most states provide a surviving spouse with a minimum ‘elective’ share, that is, the right to take a share of a deceased spouse’s property regardless of what a will or revocable lifetime trust agreement provides.”

“The idea of the elective share is to avoid the complete disinheritance of a surviving spouse, so ‘no contest’ clauses are ineffective to defeat the demand for an elective share,” he adds.  “What goes into the elective share ‘pot’ will vary from state to state. For example, in New York, life insurance is not included in determining the elective share. Some people may seek to defeat a spouse’s elective share rights by transferring property to an irrevocable trust, but they generally must survive a look-back period in order for the transferred property to be excluded.”

Potential forgery

Some retirement plans require a spouse to be the primary beneficiary. If your husband changed the beneficiary on a qualified retirement plan without your consent this should be challenged. Other retirement plans, such as IRAs, do not carry the same spousal-consent requirements. You can read more about what plans are covered under the Retirement Equity Act here.

Many people are surprised to learn that 401(k)s and IRAs are treated differently,” Carbone says. The former are governed by the Employee Retirement Income Security Act of 1974 and, typically, a spouse must consent in writing to have someone else named as beneficiary, he adds. “IRAs are not governed by ERISA and the spouse’s consent is not required to designate a non-spouse as a beneficiary.” If your husband did forge your consent on a 401(k) beneficiary designation form, you should act ASAP.

While you process that information, I have other questions for you to mull over: What are you hanging onto? The illusion of a happy marriage? The promise of financial security, even though that seems increasingly unlikely? The damage to your marriage has already been done by your husband. By hiring a lawyer after so many years of acquiescing to his requests, you would be merely cleaning up the fallout from his actions.

One final piece of advice: If you are considering divorce, you would be better off waiting until your 10th wedding anniversary. After that date, you will be able to receive spousal Social Security benefits. If he earned more than you during your marriage, you are entitled to a maximum of 50% of your husband’s full retirement benefit.

You’ve given up a lot for your husband. Yes, you did it willingly, but you contributed your time and financial expertise to your husband’s businesses, and any right-thinking divorce court would not be likely to look kindly on your husband’s actions. Not all stepmothers abide by their promise to distribute assets to their late spouse’s children, but this is not an excuse for his actions. 

In addition to forgery and financial skullduggery, you can add gaslighting to the list of his misdeeds.

You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com, and follow Quentin Fottrell on X, the platform formerly known as Twitter. 

The Moneyist regrets he cannot reply to questions individually.

Previous columns by Quentin Fottrell:

I have $1.5 million in stocks and bonds. I asked my broker to convert my bonds to cash. He didn’t and my portfolio fell by $100,000. Can I sue?

‘She was very special to me’: My late 98-year-old cousin was targeted by grifters. They stole $800,000. Do I have any recourse?

‘It was a mistake’: My father set up a revocable trust, leaving everything to my stepmother. She’s cutting me out completely. What can I do?

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