I am putting my affairs in order and have 3 children, 2 are older with families of their own the other is only 16. I’ve heard about using Testamentary Trusts and was wondering whether this would be of any benefit in my situation?
A Testamentary Trust would be of benefit in your situation as it will allow you to ensure that any inheritance you leave to your 16 year old child or your grandchildren can be managed by a Trustee either indefinitely or until they reach a certain age.
What is a Testamentary Trust?
A Testamentary Trust is when you appoint a Trustee in your Will to hold and manage assets in your Estate for the benefit of specified individuals.
In your situation the Testamentary Trust could be set up so that the Trustee manages any inheritance you have left for your children or grandchildren. It is also possible to designate only a portion of your Estate to be part of a Testamentary Trust for your 16 year old child if you do not wish to include your adult children or grandchildren in the Testamentary Trust.
How do I set up a Testamentary Trust?
A Testamentary Trust is a set of directions in your Will appointing a Trustee to manage the inheritance being willed to all or some of the beneficiaries in the way the Will directs. For instance, distributions may be made by the Trustee to the beneficiary, for their education or living expenses.
The set of directions in your setting up the Testamentary Trust needs to be carefully drafted to ensure that it is valid and effective. An expert Wills and Estate lawyer has extensive experience in drafting Testamentary Trusts and can ensure that the Trust will operate in the way you desire as well as ensuring any taxation benefits flowing from the Testamentary Trust are accessed.
Who is the Trustee of a Testamentary Trust?
You choose the person or persons you wish to be the Trustee of the Testamentary Trust and they are appointed as Trustee in your Will.
The choice of Trustee is very important as they will be holding and managing the inheritance of the beneficiaries and generally have wide powers in order to do so. It is for this reason that you need to think carefully about the person you wish to appoint as Trustee.
What do I do next?
The next step is to make an appointment with an expert Wills and Estates lawyer to discuss your wishes and the way you wish the Testamentary Trust to operate. This advice will include information and an explanation of the taxation benefits of setting up a Testamentary Trust.
Your directions will then be carefully drafted in your Will and your lawyer will ensure that the Will is signed by you in accordance with the requirements of valid Wills in the Succession Act.
Graeme Heckenberg is an expert Wills and Estates lawyer and will be able to guide you in the process of setting up a Testamentary Trust in your Will. If you are living on the Northern Beaches and surrounding Peninsula and need expert advice on setting up a Testamentary Trust call today for a an appointment closer to home on 9221 0341
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