Some people in Virginia might be unpleasantly surprised to learn during a divorce that their spouse has moved what they believed to be shared assets into an asset protection trust. South Dakota has a booming business in asset protection trusts, and people from all over the world have stored money there to avoid taxes or hide them in case of divorce.
South Dakota’s role in some divorces has been highlighted in the case of two Texas billionaires who are splitting up. The two have been married since 1989, and their wealth was largely acquired after the marriage. Among the assets accumulated are a private island in the Bahamas, multiple homes, yachts, million-dollar tapestries, a $5 million dollar mummy, and clothing and furniture that belonged to Marilyn Monroe. After the husband filed for divorce in 2017, the wife said she thought she would be fine because she would be entitled to half of their wealth. However, she then learned that all their assets, including such personal items as a diamond necklace her husband gave her and their tableware, were all in South Dakota trusts.
The state’s privacy laws for these trusts are so strict the woman and her attorneys are having trouble getting more information about them. She has filed a lawsuit but faces the possibility of only having her legal fees covered.
In a situation like this one, litigation might be the only option. However, for many couples, even those who have many assets and complex investments, it might be possible to reach an agreement on both property division and child custody through mediation. This may be particularly helpful for parents, who often have an easier time co-parenting if they have laid the groundwork for conflict resolution during divorce. The focus on mediation is a solution that is acceptable for all parties.