Testamentary Trusts: Not Just “Another” Trust?

1. Assets that don’t pass through Will

Asset	MV $	Anticipated CGT or income tax	Beneficiary

2. Assets that pass through Will

Asset	MV $	Anticipated CGT or income tax	Preferred beneficiary

3. Beneficiary

Name	Under 18/For how long	Assets at risk to creditors, ex spouse	Assets need protection from beneficiary

4. Planning

Questions	Answers
What does testator want to achieve?
What are alternatives to achieve this? What is best?
What changes should be made to assets passing through Will so more effective protection or tax advantages?
^48What will testamentary trust achieve for Beneficiary 1?
What will testamentary trust achieve for Beneficiary 2?
etc

An example of how this could work

The aim is to direct the mind to planning issues and having decided the preferred approach, then to take the necessary steps to achieve the plans.

Julian has 4 children by his first marriage aged between 12 and 24. He is currently in a defacto relationship with Melanie and they have one child aged 2 (Michael). He wants to ensure Melanie has sufficient income to live off after his death but that all his assets end up with his children.

1. Assets that don’t pass through Will

Asset	MV $	Anticipated CGT or income tax	Beneficiary
Home	400	None	Joint tenant-Melanie
Assets in first family trust	200	n/r	Expect all children to share overall, 1^st wife will be trustee when Julian dies
^49Superannuation	300		Minor child or other dependant for tax benefits

2. Assets that pass through Will

Asset	MV $	Anticipated CGT or income tax	Preferred beneficiary
^50Superannuation	300	It depends on who gets it	Minor child or other dependant for tax benefits
Shares	110	10 CGT	-
Investment property	500	100 CGT	-