Estate planning is the process of organising and arranging the management and distribution of a person’s estate during their life and after death. It involves creating legal documents that outline your wishes regarding the control of your assets, guardianship of minor children, and healthcare decisions in case of incapacitation. The primary goal of estate planning is to ensure that the people you choose have the necessary legal tools to assist you while you are alive, and that after death your assets are distributed according to your wishes, to minimise taxes, and to provide clear instructions to your loved ones. This process can include creating Wills, Trusts, and Powers of attorney. Effective estate planning helps to avoid potential disputes among heirs and ensures that your legacy is protected as best as possible.
We consider all aspects of estate planning. We will discuss estate assets (what comes into the Will) and non-estate assets (what sits outside of the Will) with you. We can provide advice, together with your accountant and/or financial planner as to the structure your assets to ensure your intentions can be followed, often with the aim of maximising benefits to your heirs and protecting your estate from claims.
A testamentary trust is a type of trust that is created through a Will and comes into effect upon the death of the individual who made the Will (the testator). Testamentary trusts advantages will be explained to you by your estate planning attorney. Unlike inter vivos or “living trusts”, which are created during a person’s lifetime, testamentary trusts are part of the estate planning process to manage and distribute the testator’s assets according to their wishes. These trusts can be tailored to address various needs, such as providing for minor children, managing assets for beneficiaries who are not capable of handling large inheritances, or reducing estate taxes.
The essential components of estate planning include:
Our solicitors give our clients options and discuss asset protection, and tax benefits that may suit you and your family. This may involve ‘testamentary trusts’ (which is a trust created in the Will) that offer these asset protection benefits to ensure that our clients’ wealth is protected for the next generation.
Unlike a typical living trust, a testamentary trust will be established upon the death of an individual, as per the instructions in their Will. These trusts are not just reserved for the wealthy; they offer significant advantages, including asset protection and tax benefits. For instance, they can provide a level of control over when and how beneficiaries, often children, access their inheritance. This can be particularly useful for safeguarding assets from beneficiaries’ potential creditors, matrimonial disputes, or poor financial decisions. Additionally, with income distributed among beneficiaries (especially minors), tax benefits can be realised.
Testamentary trusts work by specifying in the Will how the trust should be set up and managed. Upon the death of the testator, the executor of the estate will create the trust according to the Will’s instructions. The trust assets are then managed by a trustee, who is responsible for managing the assets and distributing them to the beneficiaries as directed by the terms of the trust. This can include stipulations on how and when the assets are distributed, such as when a beneficiary reaches a certain age or achieves a specific milestone. The trust can be structured to provide income for the beneficiaries, manage assets for their benefit, and ensure the testator’s wishes are followed.
Testamentary trusts offer several advantages:
Our estate planning solicitors (though not called attorneys in Australia, often referred to as estate planning attorneys in other jurisdictions) are experienced professionals who can guide you through your options in terms of estate planning, Wills and testamentary trusts. They can help you draft Wills, set up trusts, and ensure that your estate plan is legally sound and aligns with your wishes. Our team understands the complexities of probate law and can assist in collaborating with your accountant and financial advisor to create an estate plan to minimize tax obligations, protect your assets, and avoid potential legal disputes. We offer personalised services to meet your unique needs and ensure that your legacy is preserved for future generations.
To ensure that your estate planning is comprehensive and tailored to your specific needs, schedule a consultation with our estate planning lawyers. Our team is ready to assist you in creating a carefully crafted estate plan that secures your family’s future.
The cost of estate planning varies depending on the complexity of your estate and the specific services you require. Basic estate planning documents, such as a simple Will, can be relatively inexpensive, while more complex arrangements, like creating multiple trusts, will be more costly.
Costs can include estate planning lawyers’ fees, and costs for creating and maintaining trusts. Some financial institutions may also charge fees for managing trust assets.
Essential documents include a Will, Power of Attorney, Advance Care Directive and Binding Death Benefit Nominations.
No, estate planning is important for individuals of all income levels. It ensures that your assets are distributed according to your wishes, by the right people for the right people, and can help avoid legal complications and expenses for your loved ones.
A testamentary trust starts after the death of the testator and is created as part of the probate and administration process.
The beneficiary is usually the trustee of their own trust, but a third party can be appointed in place of or as a joint trustee if necessary.
The ending of a Testamentary Trust depends on the terms of the Will that creates the trust. A testamentary trust can end at a specified time outlined in the trust document, such as when a beneficiary reaches a certain age or after a set number of years, or when a Trustee decides to end the trust. Again, it depends!
Any assets specified in the Will can be distributed into a testamentary trust. This can include real estate, investments, cash, and personal property.
The trust itself may be subject to taxes, and beneficiaries may also be responsible for paying taxes on the income they receive from the trust.
Disadvantages can include the cost of setting up and managing the trust, potential delays due to the probate process, and the need for ongoing oversight by a trustee.
The duration of a testamentary trust depends on the terms set out in the Will. It can last for a few years, until beneficiaries reach a certain age, or continue for multiple generations.
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