Testamentary Trust Wills

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What is a Testamentary Trust Will?

A testamentary trust is simply a trust set up in your Will that provides asset protection and taxation advantages. The trust is the vehicle that holds the assets for the benefit of the beneficiaries.

What you need to know:

Testamentary trusts should save your family tax after you die
Testamentary trusts should protect your inheritance from divorce and bankruptcy risks
Testamentary trusts are not just for complex situations or the super-rich
You only get one chance to access the fantastic estate planning benefits of a testamentary trust – it MUST be in your will when you die
Testamentary trusts are not administratively burdensome – any extra compliance should be far outweighed by the tax savings
Testamentary trusts only only become operational when you die – the benefits don’t start until you die but neither do the (minor) compliance requirements
When in doubt, use a testamentary trust

Testamentary Discretionary Trust Wills - The Most Powerful Estate Planning Tool

Rayners Lawyers Specialising in complex wills and small business law

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What are the key benefits of a Testamentary Trust?

Relationship protection
Protects financially immature beneficiaries
Income and capital gains tax flexibility
Intergenerational wealth transfers
Rule from the grave
Defers tax for overseas beneficiaries
Bankruptcy protection
Preservation of Government Benefits
Superannuation and insurance advantages

Testamentary trusts also offer fantastic tax flexibility. In essence, trusts are flow-through vehicles for tax purposes, which means the income earned each year from investing the trust assets always needs to be distributed out to beneficiaries, and each beneficiary gets taxed on the income they received from the trust at their own marginal tax rate.

Who will benefit from including a testamentary trust in their will?

You have at least $500,000 of income producing assets (including your family home, super and life insurance)
It is important to you that your inheritance is protected from relationship breakdown (e.g. your spouse re-partnering or your children separating from their spouse)
It is important to you that your inheritance is protected from bankruptcy risks (e.g. if your spouse or children are directors of companies)
You are leaving assets to a beneficiary who cannot be trusted to manage their inheritance appropriately and you are worried they will waste it
You would like to stream $22,000 of income (generated from investing your inheritance) tax free to minor children (or future minor grandchildren) each year
An intended beneficiary is currently residing overseas (or may choose to reside overseas in the future)