How does the Divorce Protection Trust work in a Protective Will?
The Divorce Protection Trust seeks to delay or stop capital and income going to the beneficiary who is suffering a divorce or separation. It reduces the opportunity for the Family Court to get its hands on your money.
A Divorce Protection Trust is a legal tool within a Will designed to safeguard a beneficiary's inheritance from being claimed by their ex-partner during a divorce or separation. Its primary function is to prevent the inherited capital and income from being classified as a marital asset by the Family Court, thereby shielding it from division in a settlement.
The trust's effectiveness relies on a crucial distinction: the origin of the funds. A court might disregard a trust if an individual places their own assets into it to avoid a settlement. However, with a Divorce Protection Trust, the assets are gifted directly from the parent's estate into the trust, not from the beneficiary. This means the inheritance is designed never to become the personal property of the divorcing child. The trust's legitimacy is further strengthened by being structured for multiple beneficiaries, establishing it as a genuine family inheritance plan.
