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What trust do I need in my will?
Trusts are a fundamental component of estate planning in New South Wales (NSW), offering various benefits such as asset protection, tax efficiency, and tailored distribution of assets.
Below are some common types of trusts utilised in NSW estate planning:
1. Discretionary Trusts (Family Trusts): In discretionary trusts, trustees have the authority to decide how income and capital are distributed among beneficiaries. This flexibility can provide tax advantages and protect assets from potential creditors. Discretionary trusts are commonly used in family estate planning to manage and safeguard wealth across generations.
2. Unit Trusts: Unit trusts structure the trust property into units, similar to shares in a company. Beneficiaries, known as unit holders, possess a defined number of units, and distributions of income and capital are made according to the number of units held. This structure provides clarity in entitlements and is often employed in business ventures and investments. Although strictly an estate planning tool, they can be used to determine holding of assets for estate planning purposes and utilised prior to death.
3. Testamentary Trusts: Established through a Will and activated upon the testator’s death, trusts are designed to manage the distribution of the deceased’s estate. They are beneficial for providing for minors or beneficiaries who may require assistance in managing their inheritance. Testamentary trusts can offer tax benefits and ensure that assets are distributed according to the deceased’s wishes.
Read more about Testamentary Trusts here (internal link) or head over the NSW Government for further info here.
4. Special Disability Trusts: Special Disability Trusts are designed to provide for the current and future care and accommodation needs of a person with a severe disability. These trusts offer means test concessions for the beneficiary and gifting concessions for contributors, ensuring that individuals with disabilities receive the necessary support without affecting their eligibility for government benefits.
Each type of trust serves different purposes and offers unique advantages. When considering estate planning in NSW, it’s essential to consult with legal professionals to determine the most appropriate trust structure for your specific circumstances and objectives. Choosing the right trust depends on your estate planning goals. Seeking professional legal advice can help ensure your assets are structured securely and efficiently for the future.
At ALA Law, we specialise in complex estate planning and structuring trusts to meet our clients’ unique needs. Whether you need a family trust for wealth protection, a testamentary trust for future generations, or a special disability trust to secure long-term care for a loved one, our experienced team can guide you through the legal and financial considerations. We provide tailored strategies to help manage your assets, protect your estate from disputes, and ensure your legacy is preserved. Contact us today to discuss how we can assist with your estate planning needs.