A trust established by a will is known as a testamentary trust. A trust, used in a will, is an arrangement recognised by law where assets are held by someone (trustee) for the benefit of themselves and/or others (beneficiaries).

Assets held in trust are generally not available to creditors of the beneficiaries.

Why use a Testamentary Trust?

• Potential for significant Income and Capital Gains Tax Savings
• Special tax concessions for beneficiaries under 18 years of age
• Assets held in testamentary trust are protected from creditors and predators
• Trusts for people with disability or special needs are the best way to provide financial support and protection for the beneficiaries concerned
• A testamentary trust can live for 80 years (in NSW) and is the most effective way to keep wealth within the control of your family down numerous generations

 Establishing a testamentary trust in your will gives your beneficiaries maximum flexibility in dealing with their inheritance. Any assets belonging to you can be left to your beneficiaries via testamentary trust on your death. Your beneficiaries may derive benefits such as significant income tax savings for beneficiaries, special tax concessions for beneficiaries under 18 years of age, significant capital gains tax savings, preservation of the CGT principal place of residence exemption, protection from bankruptcy and family law claims, and keeping wealth in the family.

Assets passing to a testamentary trust from an estate are held for the beneficiaries until the trustee elects to distribute the assets. At law, the assets are not owned by the beneficiary and therefore are not part of the beneficiaries’ personal estate. Therefore, a creditor or litigant in a family law proceeding cannot obtain assets held in the trust.

In NSW a trust can live for 80 years, and on the death of a primary beneficiary the trust can survive for the benefit of subsequent generations of your family.