Testamentary trusts are formed by a will to give a higher level of control over the distribution of assets to beneficiaries. They also bring with them a range of tax advantages, making them a valuable estate planning tool.
Who needs a Testamentary Trust Will and why?
If your assets are in excess of $2 million, or you have a disabled child, a bankrupt child or a beneficiary who is otherwise at risk, then seek legal advice about the benefits of preparing a testamentary trust will.
There are significant benefits to be derived through a testamentary trust will, including:
- protection of assets from third parties – the trust cannot be accessed by creditors or divorcing spouses or beneficiaries who lack the necessary financial restraint to preserve capital
- maximum flexibility – an ability to restrict access to assets or distributions to a beneficiary
- minimising the tax paid by beneficiaries – income can be streamed to various beneficiaries by the primary beneficiary. Income streamed to children or grandchildren under the age of 18 is taxed pursuant to section 102 AG of the Income Tax Assessment Act 1936 at adult concessional rates (including the tax-free threshold of $18,200)
Whilst preparation of a testamentary trust will involves greater time, skill and expertise, the peace of mind created by ensuring your assets are dealt with as you intend makes the investment well worthwhile.