Wills & Testamentary Discretionaty Trusts
Wills are a common part of most people’s estate plan. Under the Succession Act, parties now have much greater flexibility with the design
of their Estate Plan to incorporate Testamentary Discretionary Trusts.
A Trust is a legal entity where one person holds the title of a property for the benefit of another person. A trustee is a person who takes the
ownership in “trust” for another person (the beneficiary). A Testamentary Discretionary Trust is created in a will, which gives trustees
control over the distribution of assets to beneficiaries.
The advantages of setting up a Testamentary Discretionary Trust in your will include:
- Protecting assets in the event your nominated beneficiaries become bankrupt or lose mental or legal capacity.
- Reducing the tax paid by beneficiaries (and their children) from income earned from their inheritance.
- Income tax and capital gains tax advantages.
- ensuring assets are passed on to children even if a surviving spouse commences a new relationship.
- providing for children with disabilities.
There are many types of Testamentary Trusts, a couple of common examples include:
- Discretionary Testamentary Trusts
This type of trust allows the beneficiary the option to take part or all of their inheritance via the trust. The primary beneficiary also
has the power to remove and appoint the trustee and can also appoint themselves or a company they control as trustee to manage the inheritance
inside the trust.
- Protective Testamentary Trusts
Under this type of trust, the beneficiary must take all of their inheritance via the testamentary trust and the primary beneficiary does
not have the power to appoint or remove trustees.
It is important to recognise that testamentary trusts are not suitable in all circumstances. But if you wish to set up a testamentary trust or
want to learn more, contact Streeterlaw Sydney lawyers, who have the expertise to set up a trust tailored to your individual circumstances.