last will

Should you be thinking about a Testamentary Trust?

A Testamentary Trust is type of Trust that can only be created in a will and comes into effect only after the death of the will maker. So instead of your assets being distributed direct to individuals they are held in trust and the income earned is distributed to nominated beneficiaries.

It is good for people who have children under the age of 18 as the distributions the child receives from a Testamentary Trust are taxed as if they were adults. This means the children can take advantage of the tax free threshold of $18,200 (normally under 18’s only get $416 of investment income tax free).

A Testamentary Trust can also be appropriate for asset protection purposes as the trust’s assets are not owned by any individual but by the Trust itself.

Testamentary Trusts are great in cases of:

  1. Divorce – The assets of the Trust are protected although the income generated can be included as a Financial Resource for Family Law purposes.
  2. Creditors – if you go bankrupt or are sued – As the assets are not owned personally creditors will not be able to access the assets.
  3. Beneficiaries – An independent Trustee can be appointed to protect the assets from being wasted thereby looking after the long term interests of beneficiaries who may have disabilities or gambling/drug problems etc.


If you would like to know more about Testamentary Trusts and Estate planning please contact our office.


You might also be interested in...

How good is your marketing? – Your accountant can help you to find out!

How successful the marketing of your product or service is, has a great deal to do with how your business operates and what it stands for, and your numbers can tell you a lot about it.

How good is your marketing?

Why you need a business budget!

A good business budget allows you to plan for business events that will affect your business’s performance over the forecast period.

Why you need a business budget

Which business structure is right for my business?

When setting up or buying a business there are a number of business structures you can use to operate the business in. Here are some of the most common structures used in Australia.

Why discounting is a dirty word!

Planning your next Sale – discounting might not be your best strategy to boost revenue! – here is why

Why discounting is a dirty word