Someone has mentioned testamentary trusts and you want to find out more about including one in your Will. A testamentary trust can be a simple trust or a complex trust created by a Will. These days when advisors recommend testamentary trusts they are usually referring to a complex trust structure which is similar to a family discretionary trust but only comes into effect when you die and thereafter continues for up to 80 years.
The key benefits a testamentary trust are asset protection and tax minimisation.
The beneficiaries of a testamentary trust can receive the income or capital or both. The trust deed can be drafted to suit the particular requirements of the client. For example, certain beneficiaries may be income beneficiaries while others may only be capital beneficiaries. The power to allocate income is usually left in the hands of the trustee – the trustee can allocate income to some of the beneficiaries to the exclusion of others.
There are various reasons why we may recommend a testamentary trust. These include, they are a good structure for preserving wealth for the benefit of successive generations, they also allow for the preservation of assets when a beneficiary may be spendthrift or suffer from some form of condition or disability and should not manage the assets themselves. Another reason is the income tax benefits which include that minor children are taxed at normal marginal tax rates (not penalty rates) on income received from a testamentary trust.
Testamentary trusts are not for everyone though. We do not over recommend testamentary trusts. We are also careful to ensure that the structure is right for you and is flexible to deal with changes that may arise in the future.
Donnie Harris Law can help:
Donnie Harris is an Accredited Specialist in Business Law (Qld) and has experience in delivering quality legal services to business owners throughout Queensland.
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