Taxation Benefits of Testamentary Trust

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What are the taxation benefits of a Testamentary Trust?

As a Testamentary Trust allows trustees to distribute and split income at their discretion, this allows them to do so with tax planning in mind.

The Trustee would usually work with a tax accountant to consider the appropriate forms and amounts of distribution for taxation purposes throughout the life of the trust.

Testamentary Trust Taxation BenefitsDistributions from a Testamentary Trust to minors will receive the usual full tax-free threshold concessions.

This tax planning benefit is considerable as the funds can be used for school fees or other extra-curricular expenses on income prior to tax.

In addition, to this, there can also be tax benefits in relation to Capital Gains Tax on income-earning assets.

When a Capital Gains Tax asset passes from the executor to a beneficiary, the law will disregard any capital gain made by the executor. The transfer of the asset is not a Capital Gains Tax ‘triggering’ event.

Advice of this nature would be provided by the tax accountant at the time of this occurring.

For more information about Testamentary Trusts, contact the team of Penrith Wills and Estate Lawyers at Amanda Little today.

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