Can you rule from the grave?
Rather than your assets passing to each beneficiary, they are held in trust and administered by a trustee appointed in your will – so you are in control. The trustee may be a lawyer, a trustee company or other person.
Who would use one?
Here are some examples.
Edith loves her grandchildren but she despairs of their fractured families. She wants her money to go to the children not be frittered away on paying debts and funding the lifestyle of their parents. A testamentary trust can solve this problem.
Mario has five young children and a large life insurance policy. He wants his children to receive income tax effectively rather than it being taxed at penalty rates as ‘unearned’ income. A testamentary trust can solve this problem.
David and Beth are in their seventies and have an intellectually disabled son. They want to ensure he is looked after when they die. A testamentary trust can solve this problem.
What are the benefits?
Testamentary trusts can be used in many other ways.
To provide for a beneficiary, who you fear will spend the money unwisely, for instance if they have a drug or gambling addiction or little sense of money management. To channel your money to specific beneficiaries and not to their spouses or the spouses’ family. To ensure your children benefit where you do not think your spouse or ex-spouse will manage the money as you would have wished.
To prevent the beneficiaries’ creditors getting hold of your money. Maybe you can’t actually ‘rule from the grave’ but a testamentary trust will let you have a pretty strong influence. Please talk to us and seek specialist legal advice in preparing your will.