What is a Testamentary Trust?
What is a Testamentary Trust? Do I need one?
A testamentary trust is a trust created pursuant to your Will. There are different types of testamentary trusts, including:
- Discretionary trusts;
- Special disability trusts.
You should consider a Testamentary Trust if any of these factors exist:
- Creditor protection for a beneficiary
- Protecting assets from family law matters for beneficiaries (e.g. Divorce and property settlement);
- Protecting assets against new spouses or marriages;
- Education – you can leave gifts for education purposes;
- High-Risk Beneficiaries – those in high-risk professions in which their assets may be available to claim against ( e.g. Doctors, Lawyers etc)
- Risk-Taking beneficiaries/beneficiaries with ongoing issues – gambling addicts, alcoholics, drug abusers, spendthrift etc
- Taxation benefits – income splitting
- Will challenges / Family Provisions Claims
- Disabled Children
It is important to discuss with your Estate Planning Lawyer if a Testamentary Trust is right for you as these documents are extremely complex and create ongoing obligations for the Trustee you appoint.