Not your marriage! We’re talking about the marriages (actual or de facto) of your children.
You’ve worked hard for your wealth.
Do you want your inheritance shared or claimed by a spouse of one or your children (upon that child’s separation or divorce) after your death?
Let’s have a look at how this could happen.
Harry and Sally are a retired couple with an estate of about $1million.
They have two children Adam and Beth.
Adam’s marriage is not going too well. He and his wife are still together, but it’s not clear for how long that will be. Adam also runs his own business – a retail shop. He struggles to make ends meet and Harry and Sally are concerned that the business may fold.
Under a simple Will, where Harry and Sally leave everything to their two children equally, Adam gets about $500k. Adam’s inheritance is completely unprotected. If Adam separates from his wife, the $500k is probably in the asset pool for division. If Adam’s business goes under, Adam’s trustee in bankruptcy will probably take the $500k for the creditors.
How do Harry and Sally stop their estate being dealt with in this way?
The answer is that Harry and Sally need to make Wills that include a discretionary testamentary trust (DTT) for Adam’s share.
We explain what DTT’s are and how they work in another blog article. In quick summary, by separating ownership and control and ensuring Adam’s only interest is as one of the discretionary beneficiaries of the DTT, his parents create the strongest argument that the inheritance is not available to claims in the event of Adam’s divorce or bankruptcy.