Is This Missing From Your Will?
Most people have never heard of a testamentary trust — but it can make a huge difference to your estate planning.
In this short video, Ross and Joe explain:
💡 How it works
💰 Why it can offer major tax benefits
🛡️ How it can protect beneficiaries
If you have a will (or plan to), this is well worth 2 minutes of your time. 📩
VIDEO TRANSCRIPT
Ross:
Hi, I'm joined today by Joe and we're going to talk about something we had a client ring us and say, "Can you tell me about testamentary trusts?" And Joe, in five words or less, what is a testamentary trust?
Joe:
Well, basically a testamentary trust is a trust that is created within a will. Now, it has the typical elements of a trust being a trustee and beneficiaries, which can be individuals or groups such as families or spouses. And it can have an appointor who decides when to appoint a trustee.
Ross:
Well, what are the benefits of having a testamentary trust and the benefits of a testamentary trust over say, a trust you create with a trust deed. Well, one thing, of course, is with a testamentary trust, there's a tax advantage that minors, people under the age of 18, can access the tax-free threshold. So therefore, rather than start paying tax at the highest rate of tax after a very small amount of income, they can earn a much larger amount of income out of a testamentary trust. So this is really good for planning wealth into the future. The other thing, of course, is you might have someone in your family who suffers a disability or maybe is someone who is prone to financial mismanagement, they have an addiction or other problem. You can provide for their inheritance, but they don't get it straight away. It's under the control of the trustee.
And the other situations where you might have young children who you want to wait till they're 21 or 25 or perhaps even some other age before they get access to the capital. So in the meantime, they can enjoy the benefits of the income. The trustee can release capital out to them to buy a house or to further their education or something like that, but they can't get their hands at a young age on the big lump of capital that comprises their trust fund. So if you want to know about testamentary trusts in any existing wills, or you want to set up a new will with a testamentary trust, or you just want to discuss testamentary... I got to get that right, testamentary trusts. Contact us, Joe or myself, Ross here at Millens. We're here to help you with your estate planning.