We are often asked what is a testamentary trust and will it be appropriate for me.

 

A “testamentary trust” is a trust created by a will, where the will directs certain assets to be held in trust for the deceased’s children, spouse or some other person.

 

That is a “testamentary trust” is a trust created by a will to appoint a trustee to use property for the benefit of the beneficiary according to the terms specified in the will. I does not come into effect until after the death of that person making the will.

 

The main benefit of a “testamentary trust” includes;

 

1.       Significant taxation advantages due to income splitting, particularly with minors.

 

2.      Financial protection of the bequeathed assets. That is, if one of the beneficiaries was going through a bankruptcy, the trustee in bankruptcy of the beneficiary would take his or her share of the inherited assets and distribute them to the benefits of that person’s creditors.

 

3.     For the beneficiaries that are physically or mentally disabled that assets could be held in trust, say a property, for that beneficiary to use.

 

4.       Protect assets in the event of a divorce. If the deceased was to bequeath the assets to his son or daughter who was going through a divorce then this inheritance could be passed on the in-law as part of a divorce settlement, even though it is not their assets but an inheritance from their parent/parent in-law.

 

 

Quinn Financial Planning has the expertise to help you build your wealth. For more advice on Testamentary Trust, please contact Peter Quinn here at Quinns by submitting an online enquiry or calling us on 9580 9166 to book an obligation free appointment. 

 

The information in this document does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it.  It is important that your personal circumstances are taken into account before making any financial decision and it is recommended that you seek assistance from your financial adviser.