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Testamentary Trusts

What is a Testamentary Trust?

A testamentary trust is created by a person’s Will.  It only operates from when the person dies and the terms of the trust are usually in the Will.

A testamentary trust is the same as a discretionary (or family) trust but ‘testamentary’ means it is created by a Will.

The testamentary trust has a trustee that runs the trust (often the executor but can be someone different or a company) and the beneficiaries are entitled to the assets of the trust, in accordance with the terms of the trust contained in the Will.

Properly drafted testamentary trusts can deal with many of the issues that simple wills cannot, like:

  • protection of assets from bankruptcy
  • protection of assets from marriage breakdown
  • very tax effective outcomes for children and grandchildren
  • protection of assets from second marriages by surviving spouse
  • protection of assets from child’s gambling issues or bad investment decisions

Some people think testamentary trusts are complicated and difficult to understand.  We draft plain English Wills and while Wills with testamentary trusts are longer, we can provide a reference summary to point out the main points.

Testamentary trusts and trusts in general are not uncommon and all accountants know how to deal with them for accounting purposes.

Wills with a testamentary trust or trusts are more costly. We can provide an estimate on request in light of your family’s circumstances before we commence.

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Contact us today by phone or email to discuss your will or testamentary trust.

Call (02) 8076 6076