Testamentary Trusts

A testamentary trust is a trust which is established by a Will, the provisions of which are embodied within your Will. The trust “comes alive” upon your death. The trust assets are comprised of assets from the estate and are administered by a Trustee or Executor appointed in the Will.

Advantages of testamentary trusts can be:

Asset protection for “at risk” beneficiaries: Inheriting assets into one’s personal name may put at risk the asset protection safeguards that beneficiaries such as company directors, doctors etc have spent time and energy during their careers to put in place.

Asset protection in family breakdowns/ divorce: A properly drafted trust may reduce the likelihood of the inherited assets being included in a court ordered property settlement.

Income splitting advantages: Tax efficiencies may be achieved through income and capital being distributed between two or more beneficiaries.

Income tax advantages when distributing to beneficiaries under 18 years old: Significant tax concessions may be achieved when a minor beneficiary receives income from a testamentary trust. Each beneficiary is taxed at the higher adult tax free threshold instead of the much lower normal rate applied to children.

*please note, Trusts can be more expensive to adminster than if the assets were held individually and can add to the costs of the intial will drafting expense.