Testamentary Trust

A Testamentary Trust is a trust created by a Will. It is generally a discretionary trust, one where the Trustee has full discretion about who benefits, and to what extent, under the trust.

A Testamentary Trust has two significant advantages for a Will maker and the nominated beneficiaries:

• Significant taxation advantages in terms of income splitting; and
• Protection of the bequeathed assets from any financial institutions or any other difficulties that the beneficiaries may suffer

The main advantage of using a discretionary Testamentary Trust for bequeathed assets is that any income gains, capital gains, and franked dividends can be distributed among all the family beneficiaries each year in the most tax-effective way.