What is a Testamentary Trust?

A testamentary trust is a trust created by a Will to receive a distribution from a deceased estate. The trust does not come into effect until after the death of the will maker. The property distributed from the deceased estate is transferred to the trustees appointed by the will maker to hold on trust for the benefit of the beneficiaries of the trust, as named in the will.

Benefits of a Testamentary Trust

Testamentary Trusts provide the beneficiaries of the trust with increased asset protection and can reduce the tax paid by beneficiaries from the income earned on the investment of the inheritance. They can also provide the will maker with a greater degree of control over the beneficiaries’ access to and use of the inheritance through the appointment of trustees nominated by the will maker to manage the trust assets.

Who should consider using Testamentary Trusts?

Anyone who wishes to provide the greatest level of protection and tax planning tools to their beneficiaries should consider incorporating testamentary trusts into their estate plan. Testamentary Trusts are commonly used by will makers where their desired beneficiary has:

• A high personal tax rate;
• Minor children and / or grandchildren;
• A partner on a lower income;
• A high risk profession;
• A risk of losing the inheritance through a third party claim.

Contact us on 1300 941 900 to learn how we can create an effective estate plan to meet your objectives and personal situation.

Read more about why you should consider testamentary trusts on our Blog.

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