Testamentary Trust Wills

In some circumstances, it may be wise and beneficial to consider the implementation of Testamentary Trust Wills - these are discretionary trusts that are contained within your Will, and are in operation once you pass away. They do not operate during your life time. 

It is important to remember that not every estate requires this sort of structure (testamentary trusts), so please don't be fooled into thinking that you must have one in your estate planning. The only real way to determine whether it is something that might benefit you and your loved ones is through legal advice and consultation. 

The Will itself becomes the trust deed for the testamentary trusts. This kind of Will is longer in length when compared to a standard Will. 

You will need to nominate a Trustee and an Appointor in your testamentary trust, and you can also nominate beneficiaries or classes of beneficiaries. 

The Trust only comes into effect once you pass away. The Trust cannot be applied retrospectively, so if it is not contained in your Will, your beneficiaries cannot decide to create one when you pass away. 

The assets in the Trust are not personal assets of the beneficiaries - they are assets of the Trust, which allows for some major benefits. 

There are several benefits that are tangible to your estate and to your beneficiaries as follows: 

1. Asset Protection - if your beneficiaries receive their inheritance directly to their personal name (as the case with a standard Will), the assets they receive become theirs right away, and there is no method to have the assets held in a trust structure if the Will does not provide for such. With a Testamentary Trust Will, you can protect your assets in your inheritance from creditors, relationship breakdowns and re-partnering situations, the potential for bankruptcy to impact inheritance, for example.
   
   
2. Beneficiary Protection - you may have beneficiaries in your estate that are suffering from mental health conditions, addiction, are spendthrifts, or have gambling or financial mismanagement issues. The addition of Testamentary Trusts in your Will can protect your beneficiary, from themselves really, and ensure that there is a suitably qualified and trusted person assisting with the distribution of their inheritance when you pass away.
   
   
3. The Government Pension - there is scope within the Testamentary Trust for the inheritance received by someone to not be assessed as part of their assets and personal income, when considering eligibility for the government pension and social security benefits. Without the Testamentary Trust in place, all assets received by way of an inheritance will count as personal assets and personal income for this purpose.
   
   
4. Tax Savings - with the use of a Testamentary Trust, you are able to distribute approximately $20,000 per financial year to a minor beneficiary (including children) and these distributions are tax free. The incorporation of a Testamentary Trust in your estate planning provides this option for your beneficiaries, and can be very useful for them when they consider their own financial decisions after you pass away.
   

To find out if your estate planning requires the inclusion of Testamentary Trusts, contact our office for a free consultation to see whether this is applicable for you. 

Some factors to consider include: 

- Your current asset pool 

- Your beneficiaries and their lifestyles, financial positions and any medical conditions they may have 

- Your relationship status 

- The manner in which you hold and own your assets and liabilities presently 

At Spirit Legal, we won't recommend this sort of Will if it is not something you require or will benefit from.