Testamentary Trusts -
Secure Your Legacy with Expert Planning
What is a Testamentary Trust?
A testamentary trust is created through your will and takes effect after your death. It gives you control over how your assets are managed and distributed among your beneficiaries. A trustee manages the trust according to your instructions in the will.
They provide financial security and flexibility for beneficiaries. They also offer tax benefits and protect assets from creditors, legal action, and relationship breakdowns.
How to Set Up a Testamentary Trust with Eleven Legal
Step 1
Book a consultation with one of our estate planning lawyers.
Step 2
Discuss your family and financial situation, and define your objectives.
Step 3
Draft and review the terms of your testamentary trust.
Step 4
Finalise your will and set up the trust.
Step 5
Ensure your beneficiaries are informed and prepared.
How a Testamentary Trust Works
A testamentary trust is established through the terms of your will. Upon your death, the trustee will manage and distribute the assets according to the instructions outlined in the will.
Drafting the Will
Your lawyer will draft a will that includes the terms for the testamentary trust.
Appointment of Trustee
You nominate a trustee who will manage the trust.
Activation of Trust
Upon your death, the trust is established and the trustee gains control of the assets.
Management and Distribution
The trustee will manage and distribute assets in accordance with the terms set out in the will.
Types of Testamentary Trusts
- The trustee has full discretion over how and when the funds are distributed.
- Allows flexibility in response to changing financial and personal circumstances.
- Designed for beneficiaries who are minors or have special needs.
- Ensures that the funds are used solely for the beneficiary’s welfare.
- Preserves the capital of the trust for future generations.
- Beneficiaries receive income, but the principal remains protected.
Benefits of a Testamentary Trust
Flexibility in Asset Disribubtion
It gives you the ability to control how and when your beneficiaries receive their inheritance. This is particularly useful for beneficiaries who are minors, financially inexperienced, or vulnerable.
- Allows staged distribution (e.g., when beneficiaries reach certain ages or life milestones.
- Protects assets from being mismanaged.
- Enables ongoing financial support for dependents.
Tax Efficiency
They help distribute assets in a tax-efficient way, reducing the tax your beneficiaries pay.
- Splitting trust income among multiple beneficiaries lowers tax liability.
- Beneficiaries under 18 are taxed at adult rates, not minor rates.
- Careful planning reduces capital gains tax on inherited assets.
Protection from Creditors and Legal Claims
It can protect your beneficiaries’ inheritance from legal claims, creditors, and family disputes.
- Assets held in a trust are not considered personal property of the beneficiaries.
- Protection in cases of bankruptcy, divorce, or other financial challenges.
- Shielded from potential legal claims or disputes among family members.
Protecting Vulnerable Beneficiaries
Testamentary trusts are especially useful when beneficiaries are minors, have disabilities, or may be vulnerable to financial exploitation.
- The trustee can manage the funds on behalf of the beneficiary.
- Ensures ongoing financial security.
- Provides peace of mind for parents and guardians.
Why Choose Eleven Legal for Testamentary Trusts?
At Eleven Legal, we help clients secure their legacy with tailored solutions. Our experienced estate planning lawyers work closely with you to protect your assets and provide for your beneficiaries.
Our Expertise Includes
- Drafting and reviewing testamentary trusts
- Advising on tax and financial implications
- Assisting with the appointment of trustees
- Managing complex family and financial arrangements
Common Mistakes to Avoid with Testamentary Trusts
- Not seeking professional legal advice when setting up the trust.
- Choosing an unreliable or inexperienced trustee.
- Failing to update the terms of the trust as personal circumstances change.
- Overcomplicating the terms of the trust, leading to confusion for the trustee.
Real Reviews by Real People
FAQS on Testamentary Trusts
Who Can Be a Trustee?
A trustee can be a trusted family member, a professional advisor, or a legal representative. It’s essential to choose someone who is reliable, financially responsible, and willing to act in the best interests of the beneficiaries.
What Assets Can Be Held in a Testamentary Trust?
A testamentary trust can hold:
- Cash
- Property
- Shares and investments
- Superannuation and life insurance payouts
Can a Testamentary Trust Be Changed?
Once a testamentary trust is established, the terms can only be changed under specific legal circumstances or through a court order.
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