What is Insolvency?3 December 2021
What is a Unit Trust?23 December 2021
A testamentary trust is essentially a discretionary trust created in a will and taking effect upon the death of the testator. The trust has a trustee (or trustees), and a range of discretionary beneficiaries (for example, spouse, children, grandchildren).
One of the many benefits of a testamentary trust arises from the fact that the assets of the trust may be controlled by the beneficiary, the actual assets held in trust do not form part of the beneficiaries estate.
This is particularly relevant in the situation where the intended beneficiary faces bankruptcy as the inheritance provided for the trust will not form part of the intended beneficiary’s bankrupt estate. Similarly, assets held in the testamentary trust are unlikely to be the subject of a Court order in the case where a beneficiary is experiencing a breakdown in their marriage or relationship. The assets of the trust may be included as a financial resource and may affect the property settlement.
One of the other benefits of a testamentary trust is that infant beneficiaries are taxed as adults with the benefit of a higher tax-free threshold. For more information about estate planning including testamentary trusts please contact us, our experience is to your advantage.