Dormant trusts - protect your kids’ inheritance [Jun 2006]

The new Relationship Property Act increases the risk that your children's inheritance may potentially be the subject of a claim by a child's marriage or de facto partner.

Formation of a Trust and transfer of your assets to that Trust is one way of protecting your children's inheritance.

However, many people are not comfortable putting all of their assets into Trust at this stage but still would like to protect their children's inheritance.

One solution to this problem is to consider the formation of a Dormant Trust which is formed now but lies dormant until your death.

Your Will is then restructured to leave your assets to the Dormant Trust of which your children are beneficiaries rather than directly to your children themselves. In this way, you may have free use and enjoyment of your assets during your lifetime and ensure that they are available to your children but protected from claims under the Relationship Property Act after your death.

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