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Does a family trust protect assets in a divorce?

Yes. Family trusts are an increasingly-common method for transferring wealth from one generation to the next, and can be particularly useful as a planning tool to offset the negative financial repercussions that can be inherent in divorce.

However, in some cases the courts have had to make complex legal ruling on how interests in family trusts are to be valued as part of the equalization of the trust beneficiary’s net family property as part of his or her divorce (in cases where the beneficiary is not also a trustee). In particular, courts have considered whether the actual property in the trust – not just the beneficiary’s legal interest in the trust – constitutes family property under the governing provincial legislation.

For this reason, it is of prime importance that you obtain the advice of an experienced family law lawyer on how to set up a family trust so that it achieves the goals that you desire.

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