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Partner - Accredited Specialist in Wills & Estates Law
Partner - Accredited Specialist in Wills & Estates Law and in Property Law
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Testamentary Trusts
A testamentary trust in a will is similar to a discretionary trust established in a person’s lifetime under which you appoint a trustee to administer certain assets for the benefit of a group of beneficiaries. The difference is that a testamentary trust is created in your will and does not take effect until you die. The benefits of testamentary trusts can be considerable, ranging from significantly reducing the tax payable on income distributed for the benefit of your children under 18 years of age, to protecting assets passing to your children from the risks of divorce or bankruptcy.
Testamentary trusts are particularly useful where the person making the will has adult children who have children of their own. In this case, a testamentary trust can be established for each child and can include their children as beneficiaries. This gives each child a chance to take control of their own part of the estate as well as the flexibility to create a tax-effective trust for their own family.
In some cases, the person making the will may wish to establish a protected trust, which aims to reduce the risk that a beneficiary’s share of their estate might be exposed to claims by creditors or a former spouse or ex-partner. Protected trusts require careful consideration, drafting and advice.
Your particular circumstances need to be carefully considered in advising on and preparing a testamentary trust and our experts can help you to decide whether a testamentary trust is appropriate.
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