A testamentary trust will is basically a testamentary trust within a will. The concept is somewhat akin to a family trust in that the trust’s trustee could allocate income to the beneficiaries nominated in the trust. A testamentary, however, is slightly different in that it would only take effect once the owner of the testamentary trust passes away.
Advantages of Having a Testamentary Trust
The primary advantage of having a testamentary trust is first and foremost asset protection. But you must also consider the different benefits when trying to decide whether to make a testamentary trust or a standard will. When you make a testamentary trust in your will, the trust would own the entitlements of your beneficiaries and your trustee would only control it for distributing capital and income to your beneficiaries.
This essentially means that your assets aren’t in the individual names of your beneficiaries, but in your trust’s name in order to afford some protection to your assets. Although you could designate absolutely anyone to be your trustee, even your will’s executor, you must designate someone that you completely trust since he or she will control the trust, recommends a renowned solicitor in QLD, who specialises in wills and estates.
A testamentary trust could likewise offer some level (meaning not absolute) of protection against the breakdown of a relationship. Other advantages include giving your beneficiaries the power to divide income and retain investments in the trust’s name throughout the succeeding generations in order to avoid transfer duty and capital gains tax.
Is a Testamentary Trust Right for You?
It is appropriate for the majority of situations due to the protection it affords your beneficiaries and assets. And although it’s not possible to predict what could happen in the future, a testamentary trust would offer ample protection to your family and other relatives you named in your trust. However, keep in mind that you must likewise take into account whether the estimated income that your estate could generate would be adequate to support the ongoing administrative costs required to maintain your trust.