A Testamentary Trust Will offers greater control over estate planning and distribution to beneficiaries in comparison to simple (or basic) wills.

The key benefits of a Testamentary Trust Will include:

• Flexibility;
• Asset protection;
• Tax planning.

Most Testamentary Trust Wills nominate a primary beneficiary (for example an adult child) and then provide for secondary beneficiaries (for example the spouse of the adult child, grandchildren etc). In most cases, the beneficiary of a Testamentary Trust Will is the surviving spouse or child of a deceased party. It is however possible to have multiple testamentary trusts in a will – one for each primary beneficiary.

Flexibility

A Testamentary Trust Will operates similar to a discretionary (family) trust and therefore the trustee can decide which beneficiaries receive trust income provided that they are nominated in the trust. This flexibility means that the trustee can distribute any income, capital gains and dividends in a tax efficient manner. In addition, the trustee has flexibility to deal with superannuation benefits in the event that they are paid to the estate.

Asset Protection

In comparison to a simple (or basic) will, a Testamentary Trust Will allows beneficiaries to take more control over assets against third parties. As the trustee holds the title to the assets of the trust (rather than by the beneficiaries directly), this allows Testamentary Trust Wills to protect assets from potential litigation (such as family court action) or bankruptcy.

Tax Planning

Testamentary Trust Wills allow trustees to distribute and split the income of the trust with tax planning as the focus. Distributions from a Testamentary Trust Will to minors receive the usual full tax-free threshold concessions which can be a significant tax planning benefit to beneficiaries who have children under 18 as they can pay for their children’s expenses out of pre-tax income. This can be useful for school fees and other extra-curricular expenses. Further, when a capital gains tax asset passes from the executor to a beneficiary, the law will disregard any capital gain made by the executor.

Contact Us

If you wish to include a testamentary trust in your will, contact us on 8523 8400 (Gawler) or 8211 6500 (Adelaide) to arrange an appointment for an initial no obligation consultation with one of our Wills and Estate Planning lawyers. Alternatively, send an email to legal@rudalls.com.au and we will contact you.