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 detailed fact sheet which covers:
- the primary characteristics of a testamentary trust;
- the powers of the trustee;
- how this type of trust can provide greater asset protection;
- income tax and capital gains taxes associated with this type of trust; and
- superannuation considerations.
Ready to get advice from a Wills & Estates Lawyer?
If you are interested in establishing a trust, our Sydney Wills & Estates Lawyers are here to answer and advise on questions you may have. Please get in touch on 02 9262 4003 for a confidential discussion or submit an online enquiry to get started.
The content of this article is intended as a general guide to the subject matter. For specific legal advice about your individual circumstances, please contact our experienced lawyers.
Geeti is an integral member of the Ivy Law Commercial and Estate Planning team, acting on a broad range of matters including business sales and company acquisitions, capital raising, contract law, family provisions and estate planning.
Geeti is passionate about helping her clients achieve optimal outcomes and is highly regarded for both her empathetic nature and strong commercial acumen.