Have the new tax changes made your Will outdated?
Most people know a Will should set out who receives their estate.
What many don't realize is that the way a Will is structured can have significant tax and asset protection consequences for the people left behind.
Recent changes to the taxation of trusts have brought testamentary trusts back into focus, and may mean that a Will which once seemed appropriate no longer reflects the most effective estate planning strategy.
The good news? In many cases, these issues can be addressed with the right advice and a timely review.
In this short video, Ross explains what has changed, why testamentary trusts may now be even more valuable, and what to consider if your Will hasn’t been reviewed in some time.
If you have a Will in place, you’ll want to watch this.
Working with you,
Ross Millen & The Millens Team
VIDEO TRANSCRIPT
Ross Millen:
Hi. So, I wanted to talk to you today about trusts and the taxation of trusts, and this has been a big issue lately because of the last federal budget where the government announced that they were going to be charging a flat rate of 30% tax on the income coming into all discretionary trusts. So, there's been a little bit of a backlash against that, and just recently the government has announced a change, and the change is that a discretionary testamentary trust, that's a trust created in a will, is not going to be subject to that flat rate of 30% tax. So, what this means, I think, is that testamentary trusts are going to become very, very popular. They're already popular for a range of reasons, but they'll be even more popular. So, what's the benefit of having a trust created by your will? Well, basically what happens is that the people who your beneficiaries are beneficiaries of that trust, they don't actually own the asset.
So, it's protected from things like bankruptcy or family law claims, or if some of your beneficiaries might be perhaps too fond of gambling and other addictive things that could waste the money. So, it's not under their control, it's in a trust, and the appointers and the trustees can determine how and when to distribute capital and income to the beneficiaries. Now, the other benefit of a testamentary trust is that children are entitled to claim the tax-free threshold, which they can't do in non-testamentary trusts, and this is a big tax advantage. But now the really big icing on the cake is that this 30% flat rate of tax is not going to apply to testamentary trusts.
So, if you need to update your will, you want us to review your will position, whether that relates to powers of attorney, or superannuation, or your will itself, remember to contact me, Ross Millen, and the team at Millens, we're here to help you with all your estate planning needs.