Estate planning is an important part of protecting your wealth and making sure that your surviving spouse and children have access to your superannuation fund. In Perth and beyond, it is reassuring to many to know that their families will be taken care of in the event of their death.
While the death benefit being paid to a surviving child under the age 18 or spouse can be tax-effective, there is more to superannuation estate planning. Vulnerable beneficiaries often need to be protected and funds need to be available to entities that are classified as “non-tax dependents.”*
What is a Testamentary Trust?
A testamentary trust is an arrangement or trust contained within a will and takes effect only after the person dies. It can be created using all or any part of the estate as assets. A will can contain many different testamentary trusts. A testamentary trust can allow for vulnerable beneficiaries to receive their funds while still preserving the tax efficiency for the spouse or children.*
What is a Testamentary Life Interest Trust?
A testamentary life interest trust is a trust that provides support to the named beneficiary for the rest of their life, starting immediately after the client’s death. If the beneficiary transcends the need for support, the money goes to other nominated beneficiaries directly. Life interest trusts do not allow the beneficiary to control the access to the funds that capitalise the trust.*
Benefits of a Testamentary Trust
Ideally, a testamentary trust is tax efficient. It also protects the assets of the trust while protecting the beneficiaries. It often provides the primary beneficiary with flexibility when trustees are allowed to decide when to release funds and how much to release.*
Call Approved Financial Planners Today
For estate planning, general financial planning or to learn more about how a testamentary trust might work for you, call our Perth office: 08 6462 0888 today.
*Financial Planning Magazine: “Essential Superannuation Estate Planning.”
