Divorce and How to Protect Legacies

Divorce is very painful. We all know that. Divorce wrecks lives and frequently plunges people into financial hardship. Currently about one in three marriages end up in divorce but what about the parents of couples who divorce.

Picture this. Mum and Dad have purchased their own home which they would like to leave in their will to one of their children. They may even have some cash or perhaps a life policy which they have also put in their Will for the benefit of that child. That child’s marriage subsequently fails after receiving the legacy from Mum and Dad.

If steps are not taken then this legacy, be it house, policies and or cash, can go down a route that Mum and Dad are not pleased about. In the absence of Wills and Trusts the full legacy passes directly to the child. Now that child divorces or is divorced. Half of the value of the house. policies and cash are vulnerable to the divorce settlement. In other words, the child’s divorced partner could end up with half of the legacy and the house etc would go down the bloodline of the other family.

Apart from the goods going somewhere Mum and Dad would not like, their child would lose half the legacy, which could even end up in the hands of the parents of the child’s spouse.

So what can be done to prevent this. The answer of course lies in Wills and Trusts. Mum and Dad should each have written a Will which contained a Trust where they placed their child’s legacy. Now all the money and the house does not belong to the child. Everything belongs to the Trust. So in the case of divorce or even bankruptcy the legacy is protected.

I firmly believe that in our modern society not enough use is made of the power of Wills and Trusts.