Testamentary Trusts

A testamentary trust by definition is a trust created by a Will. Most Wills create a trust of some sort in that upon the death of the person who made the Will the Executor holds the assets of a person’s estate on trust for the beneficiaries and then distributes those assets in accordance with the Will.
The type of testamentary trust people are generally talking about when they mention those words is a testamentary discretionary trust. Just like a discretionary family trust a testamentary discretionary trust has the benefit of the assets of the trust being controlled by the beneficiaries however these assets do not form part of their estate. This can be beneficial if –

1. A beneficiary is involved in bankruptcy proceedings;
2. A beneficiary is involved in divorce or other family law proceedings;
3. A beneficiary is at risk of being sued; or
4. A beneficiary would have problems receiving a lump sum i.e a gambling or drug addict.

A testamentary trust can also have fantastic tax benefits in that the income of the trust can be distributed in the most tax effective way to the beneficiaries. A testamentary trust can continue for up to 80 years if the trustee deems it beneficial to do so.

For further information on discretionary testamentary trusts and for an obligation free discussion to determine whether this type of Will is suitable in your circumstances contact the team at Miller Sockhill Lawyers to make an appointment.

Miller Sockhill Lawyers are a firm of solicitors with offices in Buderim on the Sunshine Coast .