Testamentary Trusts are created by the Will upon death. The wording for the trust is contained in the Will and is dormant, only coming into existence upon the Will maker’s passing.
MAIN TYPES
Discretionary
A Trust under which the Trustee has discretion to decide how the wealth in the Trust is distributed.
Protective
Controls the disbursement of income (and/or capital) generated from the Trust, and are suitable where beneficiaries cannot control their own finances, including where they are incapacitated or vulnerable.
Minors
Provides for beneficiaries under 18 years old, ensuring their income and capital is protected and managed to their advantage.
How Long do they last?
As long as 80 years or may be terminated at any time at the direction of the Trustees (if discretionary).
What assets do they hold?
The trustees hold assets on behalf of beneficiaries, and can have discretion as to which of nominated beneficiaries receive income and capital of the Trust.
Why better than a standard Will?
Because of their discretionary nature, as long as your estate remains in Trust, your beneficiaries can be protected from matrimonial or de facto splits, from creditors in the case of bankruptcy. In the case of incapacitated beneficiaries, or those vulnerable to gambling or drug or alcohol related illnesses, steady funding can be provided for medical and accommodation needs.
Trustee Powers?
The Trustees have broad powers to invest funds while under their control. Allowing the Trustee and beneficiaries a great deal of choice determining who and how will benefit from the Estate.
Lastly, they can be tax effective. This, along with them being a method to in some way “protect beneficiaries from themselves” have driven their popularity.
For more information, contact:
e: lawyers@mcpgroup.com.au
p: (03) 9620 2001
w: www.mcplegal.com.au
