1. Because none of the beneficiaries own the trust assets, it’s very difficult for someone to argue that the assets of the trust belong to any one person and those assets do not form part of a beneficiaries personal estate which can protect from financial difficulties, if they run their own business, are going through or anticipate a relationship breakdown.
2. A testamentary trust is the only environment where you can receive tax advantages as each beneficiary gets taxed at their own marginal tax rate the trustee has the flexibility to distribute to beneficiaries according to their tax rate. An additional bonus is children under 18 are treated like adults for tax purposes, which means you can distribute up to $21, 884 (2023/24) to each minor beneficiary, each year and pay 0%
3. If families wish to ensure certain assets, such as heirlooms or family property, remain in their family for years to come, this can be achieved by including a testamentary discretional trust in your will. This ensures future generations have the use and benefit of assets for years to come with boundaries around who can and cannot be included in the trust (this is sometimes referred to as a ‘bloodline trust’).
4. Provides protection for underage beneficiaries, vulnerable people, people with an illness or disability, or beneficiaries who are high risk or manage money poorly.

The trustee is responsible for managing the trust as per legislation, general administration, and tax obligations.

The executor will be the first trustee of the trust but so long as the beneficiary satisfies all the rules of the trust they can resign and appoint the beneficiary as the trustee of their own trust (this will mean the assets of the trust will look and feel more like personal assets).

If the beneficiary does not satisfy all the rules outlined by the deceased, their trust will be overseen by a trustee (this could be a parent for underage beneficiaries, a nominated person, or corporate trustee).

Beneficiaries should seek independent advice from an accountant and financial planner experienced with testamentary trusts to ensure receiving their inheritance within a trust works for their personal circumstances.

Trust set up costs are the responsibility of the estate however ongoing management fees will need to be met by the trust or the trustee of the trust.

Please seek legal advice around setting up any trust entities and the legal requirements of setting up testamentary trusts on behalf of your beneficiaries - you will not be able to do this without legal assistance.

Following the trust set up it is the responsibility of the trustee to maintain it for its duration including:

• Maintaining a record of all assets held by the trust
• Maintaining bank accounts
• Preparing annual financial statements
• Complete income tax returns
• Record all decisions that are made for the trust
• Comply with legislative requirements