Trusts can be established for either personal or business purposes and with the intent that the trustee will hold certain assets, including property, for the benefit of the beneficiary (the person set up to receive such assets). There are many different types of trusts available. In this article, we will explore what testamentary trusts are for the purposes of distributing assets in a Will, along with the associated benefits and tax obligations of setting up this type of trust.
What is a testamentary trust?
Testamentary trusts are created under a Will with the objective that the trustee (often, the executor of the Will) will hold and manage the will-maker's assets (estate) to be distributed, in the form of income or capital, to the beneficiaries according to their Will. This, of course, does not come into effect until after their death.
Testamentary trusts provide many benefits including greater asset protection, income tax benefits, superannuation and life insurance interest.
Key features of a testamentary trust
Trusts, when properly implemented, can provide many benefits from protecting family wealth to minimising tax implications. However, it is important to get expert legal advice from an experienced Wills & Estates Lawyer if you are looking to set up a trust to ensure it is executed and managed correctly, and complies with Trust Law.
To help you better understand how testamentary trusts are set up and whether it is the right type of trust for your individual circumstances, we have prepared a fact sheet on Testamentary Trusts which covers:
- the primary characteristics of a testamentary trust;
- the powers of the trustee;
- how testamentary trusts can provide greater asset protection;
- income tax and capital gains taxes associated with testamentary trusts; and
- superannuation considerations.
Download the Testamentary Trust Fact Sheet
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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