Testamentary Trusts

A testamentary trust is a trust established under a valid Will. A trustee is appointed under the Will to hold those assets in accordance with the terms of that trust.

A testamentary trust does not come into existence until the death of the testator (the will maker). Testamentary trusts are subject to different taxation rules to trusts created during one’s lifetime, eg a family discretionary trust.

What are the requirements of a testamentary trust?

A testamentary trust must have the following:

  • A trustee who holds the property and administers the trust in accordance with the instructions of the testator;
  • Property to be held on trust; and
  • A beneficiary or beneficiaries for whom the trust assets are held on trust.

Careful instructions should be given as to who is nominated to be the trustee of the testamentary trust established under the Will. Some trusts provide this person with discretion to determine what distributions are made to which beneficiaries and at what time.

What are the advantages of a testamentary trust?

  • Asset protection
  • Reducing tax
  • Capital Gains Tax
  • Incapacity
  • Protection from Family Law claims
  • Superannuation and Insurance proceeds
  • Flexibility

 

Contact our experienced Wills and Estates Lawyers today if you would like further information about testamentary trusts.

Have any questions? Speak to the experts.