T O P D O C S . C O M . A U

TYPES OF TESTAMENTARY TRUSTS

Discretionary Testamentary Trusts Lineal Descendants Testamentary Trusts Capital Protected Testamentary Trusts Special Disability Trusts

There are a number of Types of testamentary trusts  the of a willmaker will available include, or is likely to be types of testamentary converted into, a substantial Topdocs, through our associated sum of money or income trusts available to suit legal practice Topdocs Legal, offers producing investments; your client’s specific testamentary trust Wills that  the willmaker wishes to leave all incorporate discretionary or a substantial part of his or requirements. testamentary trusts, capital her estate to an adult protected testamentary trusts or who has children lineal descendants discretionary under 18; and testamentary trusts depending on  there is a reasonable possibility the circumstances and requirements of that beneficiary investing the of your clients. gift they receive to earn income In addition, to address the particular over a period (rather than needs of parents or spending it all on non-income family members of a person with a producing assets – such as a severe disability, Topdocs offers house to live in – or to pay down Wills with provisions to establish a debt). special disability trust. Discretionary testamentary trusts Discretionary Testamentary are designed to provide maximum Trust flexibility and allow for tax-effective distribution of capital and income A discretionary testamentary trust is and may also permit beneficiaries to similar to a discretionary family trust qualify for aged, disability and sole as money or other assets are left to parent pensions, Austudy or the like, a to hold on trust to make for which they would otherwise not discretionary distributions to the have qualified under a normal beneficiaries. inheritance. A discretionary testamentary trust is strongly recommended if:

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TYPES OF TESTAMENTARY TRUSTS

It also provides protection of assets  where the willmaker wishes to Act 1991 (SS ACT), which may vary for your beneficiaries from third maximise the chances that from time to time. parties in the event of bankruptcy or assets will provide for the SDTs can be established via a Will or family breakdown. The nature and education and upbringing of during the lifetime of the person extent of the available protection children or grandchildren; and creating the trust. varies and is subject to changes that  where tax planning with may occur in the law from time to spouses may not be as high a To ensure that parents or family time. For example assets in a priority as the protection of the members of an individual with a testamentary trust are often treated assets from the Family Court’s severe disability are able to avail the as a ‘resource’ available to a party to reach. benefits of a SDT, Topdocs offers a marriage. If this is an important Wills with specific provisions Capital Protected Testamentary aspect of your client’s estate designed to ensure that a SDT is planning the issue of protection Trust established upon the death of the should be specifically addressed. A capital protected testamentary willmaker. This way the executors are able to establish a SDT based on Generally few restrictions are placed trust is designed to protect and the clauses of the ‘model trust deed’ on how the trustee is to manage or preserve assets for the benefit of a current at the time. As a result, the maintain the assets. The trustee can beneficiary or for future Willmaker will not be required to dispose of all assets as he or she generations. update his/her Will each time there sees fit. Once the willmaker leaves Capital protected testamentary are further developments in the law the assets to a beneficiary by way of trusts are often used where: and the structure of ‘model trust this type of trust, the trustee (who deed’. can be a beneficiary) will have total  there is a concern that a control, unless restricted through beneficiary is unlikely to be able Where it is not clear whether the the intervention of a third party to manage their own financial beneficiary will meet the criteria trustee or protector/appointor affairs; or under the SS Act at the time of the whose consent is required.  the willmaker wishes to willmakers’ death, the provisions of maximise the chances that the Will can be tailored so that if the Lineal Descendants assets will survive the criteria are not met by the Discretionary Testamentary beneficiary for the benefit of a beneficiary at that time, a subsequent generation. trust is established instead for the A lineal descendants discretionary A capital protected testamentary benefit of the beneficiary. This way testamentary trust is designed to trusts enables the willmaker to pre- the willmaker is able to maintain the protect the assets for the benefit of determine some degree of control or ability to protect the assets from a beneficiary and their natural heirs influence over the way the assets misuse. only. A lineal descendants can be used or accessed by the Further, the provisions of the Will discretionary testamentary trust is beneficiaries. can provide flexibility for willmakers designed to ensure that control of Special Disability Trust to nominate the of the SDT the trust is retained by the natural and also specify the structure of the heirs for additional family law asset A special disability trust (SDT) is a distribution of the assets upon the protection purposes. trust established primarily by death of the principal beneficiary. parents or immediate family Lineal descendants discretionary members of a person with severe More information testamentary trusts are often used: disability to plan for the future care Should you have any queries or  to ensure that the property of and accommodation needs for that require further information, please the trust will remain only with person. SDTs attract social security contact the team at Topdocs on the “blood relatives” of the means test concessions for the 1300 659 242. initial nominated trust beneficiary and eligible contributors. beneficiary; The terms of a SDT are based on the  where there is a concern that terms of the ‘model trust deed’ beneficiaries are likely to suffer approved under the Social Security marital problems;

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