It is natural for us to put off making a Will, as it often involves dealing with our own mortality or that of our spouse, however estate planning is about planning your financial future to give you the peace of mind whilst reducing the risks to you and your family. It involves developing a strategy to deal with your assets after you die – and the review, management and control of your personal, family and business affairs while you are alive.

Liston Newton can assist you when it comes to establishing a Will that include options for beneficiaries to receive their distribution. Many sophisticated Wills include a ‘testamentary trust’ which  is different from a normal trust in that it only comes into effect once the will maker passes away.  It is a trust established under a Will that is designed to provide maximum flexibility and allow for distribution of capital and income, as well as providing protection of your beneficiaries from third parties, such as creditors.  A well governed testamentary trust will ensure that tax outcomes are achieved and, more importantly, complex family or legal disputes can be prevented.

Whilst there are multiple reasons for establishing a testamentary trust in a Will, the below case study from a Liston Newton client, highlights how it was used to provide protection of their assets for the beneficiaries.

Liston Newton Client Case Study:

John and Betty* had 3 adult children. Two were happily married, but Rita had problems with depression, alcohol and gambling. John and Betty had a healthy balance in their Self Managed Superannuation Fund and also investments outside their fund, which they intended to leave equally between their kids. They were concerned that Rita, if she received the cash directly would lose the money to gambling. They went to Liston Newton to discuss how they could protect the money that Rita would inherit while at the same time giving her an income to live off.

Liston Newton suggested setting up 3 Testamentary Trusts which would be established upon both their deaths. They determined how their assets would be split between the children, and these assets would transfer into the trusts. This would allow the two children without problems to control their own inheritance. Rita’s trust would be set up so that a Trustee controlled the assets. This could be a Public Trustee, or her two siblings.

This ensures Rita cannot access all of the assets and lose them. It could also be set up to ensure she has an income stream during her life, to cover accommodation and other life essentials.

*Names have been changed for privacy purposes

If you would like to talk about the benefits of using testamentary trusts within your Will, or for all your estate planning requirements please contact us on 03  9509 0366