Divorce marks a major transition, especially when it comes to the complex legal structures you built during your marriage. For many couples in Bloomfield HIlls and throughout Oakland County, a joint revocable living trust served as the cornerstone of their estate plan. It held the family home near Northwestern Highway, coordinated investment accounts, and protected assets for the future. But once the Judgment of Divorce is signed, that joint entity often becomes a relic of a partnership that no longer exists. Moving from “ours” to “mine” involves a specific legal process known as de-funding.

Defunding a trust is the systematic removal of assets from the trust’s name and re-titling them into your individual name or a new, separate trust. Defunding is not just a clerical task; it is a vital step in ensuring your estate plan reflects your new reality. We understand that after months of litigation or negotiation, the last thing you want is more paperwork. But leaving assets in a joint trust after a divorce can lead to unintended consequences, including your former spouse retaining control over your property or inheriting assets you intended for others.

Understanding Michigan’s Revocation-on-Divorce Statute

Michigan law provides some automatic protections, but they are not a substitute for active defunding. Under MCL 700.2807, a divorce legally revokes any revocable disposition of property made to a former spouse in a governing instrument, which includes trusts, which means that, by default, your ex-spouse is often treated as if they predeceased you for the trust.

But this statute has significant limits. It typically only applies to revocable interests and may not reach assets governed by federal law, such as certain retirement accounts or life insurance policies subject to ERISA. Relying on the law to fix your trust is a risky approach. If the trust language is not updated and the assets remain titled in the name of the joint trust, you may find yourself in a probate dispute years down the line. 

Re-Titling Real Estate in Oakland County

For most residents in the Bloomfield Hills area, the marital home is the most significant asset held in a joint trust. If the court awarded you the home, the trust must convey the property to you individually, which usually requires a new deed.

In Michigan, a quitclaim deed is a common tool used to transfer interest in real property after a divorce. According to Michigan Legal Help, the person or entity giving up the interest signs the deed in front of a notary. If a joint trust currently holds the home, the trustees must sign a deed transferring the property to you. Once signed, this deed must be recorded with the Oakland County Register of Deeds. Failing to record this transfer can result in clouded titles, making it impossible to sell or refinance the home later.

Handling Financial Accounts and Personal Property

Re-titling real estate is only half the battle. You must also address the liquid assets, which include:

  • Checking and savings accounts
  • Brokerage and investment accounts
  • Certificates of Deposit (CDs)
  • Vehicle titles

To de-fund these from a joint trust, you generally need to provide the financial institution with a copy of your Judgment of Divorce and a Certificate of Trust. Under MCL 700.7913, a Certificate of Trust allows you to prove your authority as a trustee without revealing the private details of the entire trust document. Most banks will require you to close the trust-held account and open a new individual account in your name alone.

The Danger of the “Empty Shell” Trust

A common mistake we see is when a person creates a new individual trust but forgets to move the assets into it. A trust only controls what it owns. If your assets remain titled in the name of the old joint trust, your new estate plan is essentially an empty shell.

Under MCL 700.7602, you have the power to revoke or amend your portion of a revocable trust unless the document specifically says otherwise. After a divorce, it is usually cleaner to revoke the old trust entirely once it is empty, which prevents any confusion about which document is the last word on your estate. 

Why Professional Oversight Matters

The process of moving assets from a joint trust to an individual one is technical. If you miss a single account, that asset may still be governed by the old trust rules or end up in a Michigan probate court. Given that Michigan is an equitable distribution state, the way you defund your trust must align perfectly with the property settlement ordered by the court.

We focus on the unique challenges men face during and after divorce. From protecting business interests to ensuring your children remain the primary beneficiaries of your hard-earned assets, we provide the steady hand needed to finalize these complex transitions.

If you are navigating the aftermath of a divorce and need to ensure your joint trust is properly de-funded, we are here to help. To discuss your situation with a team that understands the specific needs of men in Michigan family law, contact us today at 248-290-6675.