Is a testamentary trust right for you?
Testamentary trusts are created upon death by your will to provide a greater level of control over the distribution of assets to beneficiaries.
They can also be an effective estate and taxation planning tool.
Main types of testamentary trusts
- Discretionary - the Trustee has the discretion or ability to decide how the wealth is distributed according to your wishes
- Protective - this type controls the disbursement of income (and capital) and is useful where beneficiaries cannot control their own finances.
- Minors - provides for beneficiaries under 18 years of age. It ensures that the income and capital is protected and managed to their advantage
The most popular type of testamentary trust is the Discretionary Testamentary Trust as it can cater for protective and minor requirements at the same time.
Benefits of a testamentary trust
- Asset protection - beneficiaries may be protected against third party creditors or a trustee in bankruptcy
- Protection against relationship breakdowns - the estate may be preserved to a certain degree in the event a beneficiary suffers a relationship breakdown
- Control of spending - if a beneficiary has a habit of being unable to budget
- Incapacity, disability or vulnerability - can control flow of money and requirements for those intellectually disable, suffering dementia or alzheimers, etc.
- Tax effective - distributions to some classes of beneficiary may be concessionally taxed
- Flexibility - allows the trustee and beneficiaries a great deal of choice in determining how and who will benefit from the estate
Please contact KK Partners to discuss your situation if you think a testamentary trust may be a good option for you. We also have a network of lawyers experience in estate planning who can further assist with your requirements.