What is a testamentary trust?
Testamentary trusts are created by a Will.
It is important for all of us that our wishes are carried out regarding how our property is divided after our death and that we benefit our loved ones as much as we are able to. There can be unforeseen, negative consequences which come from attempting to “rule from the grave”. A Will containing a testamentary trust can provide significant advantages and flexibility to beneficiaries. Such a Will can provide for beneficiaries tax advantages through income splitting as well as protection of estate assets against the risk of claims arising from financial or other difficulties encountered by beneficiaries.
Testamentary trusts under the current tax law, attract different and better provisions for income splitting amongst beneficiaries than do trusts created in one’s lifetime. This can lead to significant advantages in terms of tax payable on income from interest, capital gains and franked dividends on assets after the testator’s death, thus allowing for tax efficient distribution amongst beneficiaries.
Asset protection and family breakup
A Will can establish more than one testamentary trust. A separate testamentary trust can be established for each beneficiary.
Testamentary trusts can assist with asset protection for family members, including family members who are at risk of bankruptcy, matrimonial breakdowns and those with specific problems, which may cause them to mismanage or waste their inheritance.
We can help
You should fully discuss your financial circumstances as well as your family circumstances with an experienced succession lawyer, to consider the appropriateness of including a testamentary trust in your Will. Springwood Lawyers is able to assist you in this regard.