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Testamentary Trusts

A Testamentary Trust (sometimes referred to as a Will Trust or Trust Under Will) has many benefits for both the beneficiaries and the Will-maker by ensuring assets are protected, distributed according to the deceased persons’ wishes, and taxation minimised. East Coast Law is highly experienced in providing expert legal guidance and drafting services for Wills including Testamentary Trusts.
Speak to our team of estate lawyers to create a plan that protects your assets and your family

What is a Testamentary Trust and How Do They Work?

A Testamentary Trust is a trust that will hold the Will-makers’ assets on behalf of the nominated beneficiaries in the event of the Will-makers’ death. A testamentary trust is established under a valid Will which can include restrictions on any or all of the beneficiaries or conversely, grant them extensive control.

The Will nominates one or more Trustees to control the trust, giving them control over which of the nominated beneficiaries receive distributions from the trust at any given time. This can be in the form of income generated by the trust or the division of the assets of the trust. Nominated Trustees can be beneficiaries, an independent 3rd party with experience in managing trusts, or a combination of both.
Because the deceased persons’ assets are transferred to a trust rather than directly to each of the beneficiaries individually, testamentary trusts can provide significant benefits over a standard Will. Allowing for tax-effective distribution of assets, providing a greater degree of asset protection, and greater flexibility in how and when distributions are made to ensure benefits are maximised.
A testamentary trust can be validly established for up to 80 years and dissolved by the Trustee(s) at any time, with assets distributed to the nominated beneficiaries. This allows Will-makers to plan for their estate to benefit multiple generations of their family, particularly grandchildren.

Benefits of a Testamentary Trust

Asset Protection

As the estates' assets are not held directly by the beneficiaries they are less likely to come into consideration in events such as divorce, de-facto separation, or remarriage. A trust also helps to insulate against other 3rd party claims brought on by bankruptcy or legal litigation.

Tax Advantages

A Testamentary Trust allows benefits from the trust to be distributed to its beneficiaries in the most tax-effective manner. This can include considerable reductions in the total tax payable when distributions are made to beneficiaries under the age of 18 as well as minimising capital gains tax losses.

Protection Against Loss or Dissipation

A Testamentary Trust is particularly beneficial for beneficiaries who are children, have a mental disability, or any other reason where the Will-maker may have concerns about the loss or dissipation of an inheritance. A trust will allow these beneficiaries to still receive the benefits intended for them but under the discretion of the trustee.

Greater Control

The inclusion of a Testamentary Trust in a Will provides the Will-maker with a greater level of control over exactly who is entitled to receive benefits from their estate and when. The ability to appoint an independent Trustee to manage the trust can help to further ensure the Will-makers' wishes are carried out as planned.

Preservation of Government Benefits

Government benefits such as Centrelink and the Age Pension do not take assets held by testamentary trusts into account when calculating eligibility which may otherwise prevent or limit these payments.

Superannuation and Insurance Proceeds

Generally, Superannuation and insurance proceeds are distributed according to the rules of the fund or policy. A Will-maker may choose to have these proceeds directed into a Testamentary Trust so that these funds can be covered by all of the benefits listed above.

Speak to our team of estate lawyers to create a plan that protects your assets and your family

Testamentary Trust Lawyers - Experts in Wills and Estate Law

Our team of wills and estate law specialists are here to help you plan for the future. Experienced legal advice along with careful and considered drafting of your Will and Testamentary Trust by an experienced solicitor will ensure that your wishes are documented accurately.
Our commitment to compassionate and professional advice, along with our dedication to the careful and considered preparation of your legal documents, means you can rest assured knowing that your estate is in order when the time comes.
Because the deceased persons’ assets are transferred to a trust rather than directly to each of the beneficiaries individually, testamentary trusts can provide significant benefits over a standard Will. Allowing for tax-effective distribution of assets, providing a greater degree of asset protection, and greater flexibility in how and when distributions are made to ensure benefits are maximised.

With offices in Newcastle, Toukley, Maitland, Edgeworth & Port Macquarie our team are here to help you with affordable and approachable estate planning services.

Speak to our team of estate lawyers to create a plan that protects your assets and your family
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