TESTAMENTARY TRUSTS
WHAT IS A TESTAMENTARY TRUST?
Testamentary Trusts are created in your Will to provide control over the distribution of your estate. They are similar to trusts created during your life time except that Testamentary Trusts only commence on your death and can take a number of forms (discretionary, fixed, life, protective). A Trustee manages the trust on behalf of the appointed or class of beneficiaries. The Trust can have a life of 80 years, although that can be shortened by a period specified in the Will, or by the beneficiaries "opting out" if allowed by the trust, or the Trustee resolving to wind it up.
WHO NEEDS A TESTAMENTARY TRUST?
You might do. Generally, Testamentary Trusts are created for large estates where the income and capital can be split between family members, including children who are minors where there are significant tax savings. They are also good in situations where a beneficiary has a disability, gambling or drug habit, operates their own business or is threatened by a relationship breakdown.
WHY IT’S GOOD TO HAVE A TESTAMENTARY TRUST?
The main benefits of Testamentary Trusts are their ability to protect your estate and to reduce tax paid by beneficiaries from income earned from the inheritance. The Trustee may distribute capital and income to any nominated beneficiary at any time and in any proportion unless it is a fixed trust. A Testamentary Trust gives the beneficiaries both flexibility and control over when and how they take their inheritance. When creating the trust you may choose an individual(s) or an organisation to be the Trustee, but they should be someone you totally trust to act in the best interests of the children or others receiving the trust funds. Contact us for a free initial discussion.