Protecting Your Children’s Inheritance from Divorce with Testamentary Trust Wills: The Bernard v Bernard Case

November 9, 2025

At Crabtree Legal, we understand that protecting your children’s inheritance from potential relationship breakdowns is a crucial concern for many families. The landmark Family Court of Australia decision in Bernard and Bernard [2019] FamCA 421 confirmed that testamentary trust Wills can be an effective tool in safeguarding a beneficiary’s inheritance from being divided upon divorce.


Background of the Case


In Bernard v Bernard, the husband’s late father created two discretionary testamentary trusts through his Will — one for his son and one for his daughter. The trusts operated as “mirror trusts”: each sibling was the trustee of the other’s trust but had no control over their own trust. The husband was the primary beneficiary of his trust, but the assets were legally owned and controlled by his sister as trustee.


When the husband and wife later separated and divorced, the wife sought to have the husband’s inheritance held in the testamentary trust included in the matrimonial property pool for division. However, the husband argued that since he did not legally own or control the trust assets, and his interest was solely as a beneficiary dependent on the trustee’s discretion, the inheritance should be excluded from the property pool.


Court’s Decision and Key Findings


The Family Court ruled in favor of the husband, finding that the assets in the testamentary trust were not part of the matrimonial pool. The court’s key reasoning was that:


  • The husband was not the settlor of the trust—the deceased father was.


  • The husband had no legal ownership or control over the trust assets.


  • The trustee (the husband’s sister) had complete discretion over income and capital distributions.


  • The husband’s interest was discretionary and not guaranteed, meaning he could not compel distributions.


  • The trust assets were inherited and not acquired during the marriage.


This decision confirmed that a properly structured testamentary trust can protect a beneficiary’s inheritance from being divided upon divorce by separating legal ownership and control from mere beneficial interest.


Why This Matters for Your Estate Planning


Bernard v Bernard highlights how testamentary trust Wills can be used to safeguard your children’s inheritance from future relationship breakdowns, ensuring that inherited assets remain protected within the family and are not treated as divisible property in the event of a divorce.


At Crabtree Legal, we specialise in Wills incorporating testamentary trusts and can provide tailored advice and drafting services to help you protect your family’s wealth across generations.


Contact Crabtree Legal Today


If you want to ensure your children’s inheritance is protected from a future divorce or relationship breakdown, contact Crabtree Legal today. We will guide you through establishing testamentary trust Wills that provide peace of mind and strong asset protection tailored to your family’s needs.

Thank You to The Executive Centre and Attending Business Leaders

October 17, 2025
Crabtree Legal extends our sincere thanks to The Executive Centre for graciously hosting yesterday's Member Showcase lunch event, where our Director, Jonathan Crabtree, had the pleasure of presenting to fellow business owners. The session explored the limitations of Artificial Intelligence (AI) in drafting key legal documents for start-ups and Small to Medium Enterprises (SMEs). Together, we examined common pitfalls that arise when relying solely on automated drafting tools, including the risks of incomplete agreements, unenforceable clauses, and loss of commercial protection. We are particularly grateful to the business owners and entrepreneurs who attended and contributed to the discussion. Your questions, insights, and shared experiences sparked an engaging and practical conversation about balancing technological progress with the value of tailored legal advice. At Crabtree Legal, we remain committed to helping Perth’s business community make informed decisions as they grow and protect their ventures. Events like this highlight the strength of collaboration between local professionals and the importance of thoughtful, legally sound documentation in every stage of business development. To learn more about how we assist start-ups and SMEs with business structuring, shareholder agreements, and contract reviews, please contact us.

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Testamentary Trust Wills provide significant benefits for individuals and families planning the distribution of their estates in Western Australia, particularly in terms of asset protection, tax efficiency, and supporting vulnerable beneficiaries. These trusts are established within a Will and become effective upon death, offering tailored advantages for diverse family circumstances. Key Benefits of Testamentary Trust Wills Asset Protection Safeguards inheritance from creditors, bankruptcy, and family law disputes by holding assets within a trust rather than direct ownership by beneficiaries. Shields assets from potential misuse or waste by beneficiaries with high-risk behaviours such as gambling, financial instability, or poor money management. Protects funds from being included in divorce settlements, ensuring they remain accessible only to intended family members. Tax Advantages Optimises tax outcomes by enabling income splitting among beneficiaries, especially those on lower marginal tax rates. Allows income distributed to minor children (under 18) via a testamentary trust to receive the full adult tax-free threshold (around $19,000–$22,000 per child annually, tax-free), compared to only about $500 in a standard family trust. Provides flexibility to defer tax liabilities for overseas beneficiaries by controlling the timing and distribution of income. Support for Vulnerable and Young Beneficiaries Helps ensure responsible use of inherited assets by enabling trustees to set age thresholds (e.g., 21, 25, or older) for the release of funds to younger beneficiaries. Allows creation of specialised trusts for beneficiaries living with disabilities, including Social Security Act 1991 (Cth) compliant Special Disability Trusts. Can provide long-term security for those who require ongoing support, such as family members with health challenges or special needs. Estate Planning Flexibility Highly customisable trusts can be tailored for one person, an entire family, or multiple generations, addressing complex family or blended family situations. Enables control over how and when assets are distributed, including restricting access to certain beneficiaries or protecting inheritance lines within families. Trustees are chosen to ensure accountability, oversight, and alignment with the intentions of the Will-maker, often with recommendations for two trustees to reduce risks. Who Should Consider a Testamentary Trust Will? Individuals leaving substantial estates (often $2,000,000 or more) including superannuation or life insurance. Estates intended to support minor children, vulnerable adults, or those likely to face relationship or financial risks. Families wishing to maximise tax savings and asset protection across generations. Crabtree Legal: Expert Guidance for Your Estate Plan Crabtree Legal offers tailored advice on testamentary trust Wills to protect your legacy and secure your family’s future. Whether you need a simple Will or a complex estate plan, we support business owners, families, and individuals through every stage of estate planning, succession, and trust creation. Feel free to contact Crabtree Legal for a personalised consultation to explore how a testamentary trust Will could benefit your unique situation.

How Getting Married or Divorced Can Revoke Your Will

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A person's Will in Western Australia is generally revoked by marriage or divorce, unless it's made with their specific intention to marry or divorce clearly stated in the Will (or there is other evidence which establishes this intention). What Happens If You Get Married Under section 14 of the Wills Act 1970 (WA), marriage automatically invalidates your existing Will, unless your Will expressly states it was made "in contemplation of marriage" to your intended spouse. If your Will is invalid and you pass away, your assets will be divided according to WA's intestacy laws, which may not reflect your wishes. The best practice is to obtain a new Will after marriage to ensure all your assets and intentions for your loved ones are protected. What Happens If You Get Divorced Section 14A of the Wills Act 1970 (WA) outlines that divorce also cancels your Will unless your Will shows a clear intent for it to remain valid after divorce. Practically speaking, the automatic revocation in section 14A makes sense, as it is unlikely that you would still want to appoint your former spouse as the Executor of your Will, or provide for them from your estate, after you have divorced. However, if you do not update your Will after divorce, there may be unintended consequences, such as assets going to your ex-spouse or confusion and disputes among family members. Why Updating Your Will Matters Failing to update your Will after marriage or divorce can lead to estate mismanagement, litigation, or your wishes not being honored. If your relationship status has changed, make an appointment to create or update your Will so all provisions accurately reflect your current wishes and protect your loved ones. This is especially important for blended families, business succession planning, and unique asset structures. Get A Will That Reflects Your Changed Circumstances At Crabtree Legal, a veteran-owned and operated law firm in Perth, we pride ourselves on delivering expert, practical advice and drafting for Wills, estate, and succession matters. If you or anyone you know has recently married or divorced, please refer them to us—it may be time to get a new Will to ensure their wishes and family's future are protected.