What is a Testamentary Trust?

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A testamentary trust is established under a Will and commences on the date of death of the Willmaker.

A testamentary trust can be:

  • A fixed trust: the trustee holds the assets in a trust fund for a specific beneficiary, for example, for a child until he or she attains the age of 25 years;
  • A discretionary trust: the trustee holds the assets in a trust fund for a number of beneficiaries and the trustee has the absolute discretion to decide which beneficiary or beneficiaries receives income generated by the assets and, depending on how the trust is drafted, an actual asset.

WHAT ARE SOME OF THE ADVANTAGES OF A DISCRETIONARY TESTAMENTARY TRUST?

A discretionary testamentary trust can be part of an asset protection strategy for your family.

As the trustee is the legal owner of the assets in a trust fund, in the event a beneficiary is sued or declared bankrupt, those assets cannot be used to pay claimants or creditors because the beneficiary does not own them.

A discretionary trust can also be tax effective, especially for families with young children or for estates that hold assets subject to capital gains tax.

GET IN CONTACT TODAY

If you would like further advice, we recommend that you book a free consultation with our experienced Estate Planning Lawyers. Call Estate Lawyers on (03) 9088 3185. Alternatively, you can email us at info@estatelawyers.com.au.

Author Estate Lawyers

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