The Federal Government has, fortunately, reversed its proposed changes affecting testamentary trusts. Following significant industry concern, testamentary trusts have been exempted from the proposed 30% minimum tax on trusts.
This is welcome news, as testamentary trusts remain one of the most effective estate planning tools available.
A testamentary trust is a trust established under a person’s will. Unlike a discretionary family trust created during a person’s lifetime, a testamentary trust only comes into existence upon the will-maker’s death.
Through a testamentary trust, you can direct that all or part of your estate be held on trust for one or more beneficiaries. Depending on the terms of your will, the trust may be controlled by that beneficiary or by an independent trustee or even jointly.
One of the key advantages is that beneficiaries can enjoy the benefit of the inherited assets without necessarily owning them personally. This can provide valuable protection in a range of circumstances, including where a beneficiary:
- is financially inexperienced or prone to overspending;
- has a disability or requires ongoing assistance;
- is exposed to claims from creditors; or
- may face family law or other third-party claims in the future.
In addition to these asset protection benefits, testamentary trusts can also provide significant taxation advantages for beneficiaries, making them a highly flexible and effective estate planning strategy.
If you would like to discuss whether a testamentary trust is appropriate for your circumstances, or how it may benefit your intended beneficiaries, please contact Tracy Collins, our Accredited Wills and Estates Specialist or Anna Nikol Tanti.
Email: Tracy.collins@nevile.com.au
Ph: 03 9664 400
