Protection from the in-laws!

When it comes to estate planning, one of the most common concerns parents express is protecting their children’s inheritance—not just from external risks, but also from their son-in-law or daughter-in-law. Many parents want to ensure that their wealth remains within their family and does not end up in the hands of a child’s spouse in the event of a divorce or separation. 

Thankfully, there is a highly effective solution to address this concern: a testamentary trust. 

Why Parents Want to Protect Their Children’s Inheritance from Spouses 

While every family dynamic is different, it’s not uncommon for parents to feel uneasy about their child's marriage or relationship. Common concerns include: 

• Risk of divorce: If a child inherits assets outright, those assets may be subject to division in a divorce settlement. 

• Financial mismanagement: Parents worry that their child’s spouse may not handle money responsibly, putting the inheritance at risk. 

• Protecting grandchildren: Parents want to ensure that their wealth stays within their direct bloodline and ultimately benefits their grandchildren. 

A testamentary trust is an estate planning tool that provides significant protection against these risks while still ensuring that children can fully benefit from their inheritance. 

 
What Is a Testamentary Trust? 

A testamentary trust is a trust established in a will that comes into effect after the person making the will (the testator) passes away. Unlike a standard will, which simply distributes assets directly to beneficiaries, a testamentary trust holds assets within a trust structure, adding an extra layer of legal protection and control. 

Key elements of a testamentary trust include: 

✅ Assets are controlled by trustees rather than being given outright to beneficiaries. 

✅ Beneficiaries can access funds, but strict rules prevent spouses from gaining direct ownership. 

✅ The trust prepared by Vicca Law can offer protection against divorce proceedings, bankruptcy, and financial mismanagement. 

 
How a Testamentary Trust Protects Against In-Laws 

A well-structured testamentary trust ensures that an inheritance remains within the family, even in the event of a relationship breakdown or divorce. 

1. Spouses Are Excluded from the Trust 

Unlike many traditional family trusts, which often include spouses as potential beneficiaries, a testamentary trust can be drafted to specifically exclude a son-in-law or daughter-in-law. 

✅ Only your children (and grandchildren) will benefit. 

✅ A spouse cannot access or claim the assets held in the trust. 

This prevents an in-law from ever gaining control or ownership of the inherited wealth. 

2. Automatic Removal of a Trustee in the Event of a Family Relationship Breakdown 

A critical protection mechanism of a testamentary trust we draft at Vicca Law is that if a child enters into a family relationship breakdown (including a divorce), they automatically lose control of the trust. 

By structuring the trust in this way, the family court is less likely to view the inheritance as an asset of the marriage, offering strong protection against financial claims from an ex-spouse. 

3. Protection from Bankruptcy and Poor Financial Decisions 

While the primary concern for many parents is divorce, a testamentary trust also protects against financial instability—whether due to bankruptcy, lawsuits, or irresponsible spending. 

✅ If a child goes bankrupt, assets within the trust may not be able to be claimed by creditors. 

✅ If a child struggles with financial management, trustees can control distributions to prevent reckless spending. 

This ensures that inheritance funds are used wisely and remain protected for future generations. 

What Happens If a Child Inherits Assets Directly Instead? 

Without a testamentary trust, a child’s inheritance typically becomes their personal asset, meaning: 

❌ If they enter into a family relationship breakdown, their spouse could claim a share. 

❌ If they face financial troubles, creditors could seize the assets. 

❌ If they pass away, the inheritance could pass to their spouse instead of their children. 

A testamentary trust prevents these risks by keeping assets separate from personal finances. 

Who Should Consider a Testamentary Trust? 

If you want to ensure that your children’s inheritance is fully protected, a testamentary trust is an essential estate planning tool. It is particularly beneficial if: 

✔ You have concerns about your child’s marriage or relationship stability. 

✔ You want to safeguard your grandchildren’s future inheritance. 

✔ You want long-term financial protection for your children. 

Once a testamentary trust is set up, it provides a long-term solution for protecting your family’s wealth. 

Final Thoughts: A Testamentary Trust Is the Best Way to Protect Your Family’s Wealth 

If you want to keep your hard-earned assets within your family and out of the hands of in-laws, a testamentary trust is the most effective solution. 

At Vicca Law, our testamentary trusts are tailored to provide the strongest protection available, ensuring that: 

✅ Spouses are excluded from benefiting. 

✅ Children have controlled access to their inheritance. 

✅ Assets remain within the bloodline for future generations. 

✅ There are built-in protections against divorce, bankruptcy, and financial mismanagement. 

💡 If this sounds like what you need, book a consultation at www.viccalaw.com.au or email lidia@viccalaw.com.au to discuss how a testamentary trust can safeguard your family’s wealth.