Wills and Estates : Testamentary Trusts

This is a Will with special provisions, whereby your estate (or part of it) is held by a Trustee, with discretion to pay the income and/or capital to a series of named beneficaries.

For instance, parents may create three separate trusts for each of their three children. The beneficiaries in each trust could be one of their children, that child's spouse and their children.

This would allow an equal division of your estate to each child. The Trustee would have the ability to distribute income and/or capital to your child’s family in a manner that would be most effective to them.

For example, income from the trust may be best distributed to your child’s children, which could take advantage of better tax scales (i.e. income splitting, which is not available if your children received an outright legacy).

This form of trust is also useful if you have a child susceptible to gambling, drugs, intellectual disability or bankruptcy. The nature of the trust, means that the funds are not actually theirs, until such time as the Trustee distributes to them. This could be done by way of weekly/monthly amounts, so as not to be "wasted" in a lump sum.

It also allows great flexibility to provide for part of the trust fund to be paid out immediately (say, to pay off a home loan) and the balance to be invested and the income divided in a tax effective method.

Whilst these funds remain in the trust, they can also be protected from a Family Law dispute between your children and their spouse.

Tax effective, asset protection and flexibility. This is what a lot of people regard as ideal.

Please ask at any of our offices to see if a Testamentary Trust would suit you.

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