What is a Testamentary Trust Will?

A testamentary trust is a trust that is created by a Will and comes into effect after the will-maker’s death. It provides greater control over the distribution of assets to beneficiaries and there are tax, control and other advantages available through testamentary trusts that make them an effective estate planning tool.

Under the testamentary trust, the trustee of the testamentary trust will hold the assets on trust according to the terms of the trust set out in the Will. Notwithstanding the trustees involvement, the beneficiaries of the trust will have the beneficial title to the assets.

This structure provides a greater level of control over the distribution of the assets to the beneficiaries and can often proved tax advantages for beneficiaries.

A testamentary trust Will is not suitable for every person however in many situations they offer valuable advantages over standard wills. In general terms, a testamentary trust Will can be used when the will-maker has sufficient assets and wants to create a structure which will give each member of the family a choice of entering or not entering a trust structure. This allows for tax minimization and asset protection.

In determining whether you have sufficient assets to warrant a testamentary trust Will, this is generally held to be suitable if a beneficiary will receive a gift of at least $450,000.00. This figures is inclusive of superannuation and life insurance.

If this blog post has sparked your interest in whether a testamentary trust Will may be suitable to your circumstances, keep an eye out for next week’s blog on the reasons why you would consider incorporating a Testamentary Trust in your Will.