Testamentary Trusts
Wills & Estate Planning
Need help setting up a discretionary or protective testamentary trust?
At Burgess Thomson, we specialise in crafting tailored estate planning solutions that safeguard your legacy and ensure your loved ones are cared for according to your wishes. Testamentary trusts, a cornerstone of comprehensive estate planning, offer a flexible and protective approach to asset distribution.
Based in Newcastle, our experienced legal team is dedicated to guiding you through the intricacies of testamentary trusts, ensuring your estate is managed and distributed with precision and care.
How Burgess Thomson Can Help with Testamentary Trusts
Testamentary trusts are trusts established by a Will to provide enhanced control over how your assets are distributed to your beneficiaries after your passing. With significant tax benefits and the ability to tailor the distribution of your estate, testamentary trusts serve as an invaluable tool for thoughtful estate planning.
Our services in this area include:
- Personalised Estate Planning: We understand that every estate is unique. Our legal experts work closely with you to understand your specific wishes, financial situation, and family dynamics to craft a bespoke testamentary trust that aligns with your objectives.
- Discretionary Testamentary Trusts: Ideal for providing beneficiaries with the flexibility to manage their inheritance within a trust structure, discretionary testamentary trusts offer the primary beneficiary the autonomy to appoint or remove trustees, including themselves. Our team ensures that these trusts are structured to maximise the benefits while maintaining compliance with legal standards.
- Protective Testamentary Trusts: For beneficiaries who may not have the capacity or inclination to manage their inheritance responsibly due to age, disability, or other factors, protective testamentary trusts offer a solution. These trusts ensure that the inheritance is managed by appointed trustees, providing long-term protection and support. We assist in setting up protective trusts that meet your specific needs and the needs of your beneficiaries.
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Why Choose Burgess Thomson for Testamentary Trusts?
Choosing the right legal firm to assist with your testamentary trust is crucial. Burgess Thomson stands out for several reasons:
- Expertise and Experience: Our legal team possesses a deep understanding of estate planning laws and strategies, with years of experience in setting up testamentary trusts that cater to a wide range of circumstances and needs.
- Tailored Solutions: Recognising that one size does not fit all, we pride ourselves on delivering customised estate planning solutions. Our approach ensures that your testamentary trust reflects your wishes accurately and benefits your beneficiaries as intended.
- Comprehensive Support: From initial consultation to the final execution of your Will and beyond, Burgess Thomson provides end-to-end support. We’re here to answer your questions, address your concerns, and make adjustments as your life circumstances change.
- Tax Efficiency and Asset Protection: Testamentary trusts can offer significant tax advantages and protect your assets from potential claims. Our team is skilled in structuring trusts to maximise these benefits, ensuring a lasting legacy for your beneficiaries.
Testamentary trusts offer a strategic way to manage and distribute your estate according to your precise wishes, providing peace of mind that your legacy will be protected. With Burgess Thomson, you gain a partner committed to navigating the complexities of estate planning with expertise, compassion, and personalised care. Contact us today to discuss how we can assist in securing your legacy through the strategic use of testamentary trusts.
Contact us or request a quote to learn more about how our skilled team in Newcastle can help you set up a testamentary trust.
Benefits Of A Testamentary Trust
Tax Benefits
- Testamentary trusts can be very tax effective. Income, capital gains and franked dividends from shares can be distributed among all beneficiaries, each year in the most tax-efficient way. For example, income can be distributed to a minor beneficiary who has no other income, rather than to their parent who is otherwise earning a high income and paying tax at the top marginal rate.
- With a Testamentary Trust, the trustee chooses how to distribute that income from year to year. This enables the trustee to take advantage of lower marginal rates of tax of one or more potential beneficiaries and spread the burden of tax.
- Income distributed to children under 18 from an ordinary trust is subject to a flat tax rate of 47% and the child does not get the benefit of the tax-free threshold and the graduated marginal rates of tax. However, children under 18 do qualify for these tax concessions on income that they receive from a testamentary trust and a large potential saving on tax.
- Testamentary Trusts can also provide benefits when it comes to Capital Gains Tax (CGT) and stamp duty. When you die and an asset passes to directly to one of your beneficiaries, a transfer of all or part of that asset to another person will trigger CGT and stamp duty for that beneficiary. However, a testamentary trust can provide greater flexibility in how assets are transferred and this can greatly reduce the cost of restructuring entitlements under an Estate.
Protecting Your Assets
- The trust structure protects the assets from any claims against the beneficiaries. Where necessary – when the appointed trustee is not the beneficiary – it also protects the trust’s assets from misuse by the beneficiary themselves.
- Testamentary Trusts protect your wealth from unjust claims. Your beneficiaries do not receive the assets directly but rather an entitlement in a trust so if your beneficiaries are experiencing relationship or financial difficulties, a trust can provide a higher level of protection from claims. If a beneficiary faces bankruptcy, an asset held for that beneficiary in a testamentary discretionary trust will not be available to satisfy the beneficiary’s creditors.
- Likewise, assets held in a testamentary discretionary trust are not part of the pool of assets available to be divided up in family law proceedings, in the event of a beneficiary becoming separated from a spouse or partner. A Testamentary Trust will also provide protection for your children or grandchildren in the event your spouse remarries or has other children.
- This protection extends to claims against the estates of your beneficiaries. If the assets to which they are entitled under your will are held in trust, then those assets do not form part of their deceased estates when they die and are not available to any claimant on their estate.
- Testamentary trusts can also effectively protect beneficiaries from themselves. For example, if a beneficiary has an addiction, a bequest could be left in a trust which allows them to receive appropriate maintenance and treatment but does not allow them to access the capital. Testamentary Trusts can protect your children’s inheritance if under the age of 18 as they provide control as to when your children gain access to particular assets and for what purpose.
Flexibility
- A testamentary discretionary trust is established by the terms of your will and gives flexibility as to how and when your beneficiaries receive their benefits from your estate, which protects the beneficiaries’ entitlements and minimises any applicable taxation consequences for them.
- This is possible because, under a testamentary trust, the assets of your estate will be held by a trustee for the beneficiaries, not by the beneficiaries. This applies despite the fact that the trustee can be – and usually is – also the beneficiary of the trust, which gives them total control of their inheritance without the assets being at any risk.
