Testamentary trusts explained

Short answer: A testamentary trust is a trust created by your Will that only comes into effect after you die. Instead of paying a gift directly to a Beneficiary, it is held and managed by a trustee you choose until a set age. RapidWills includes it at no extra cost.

Why people use them

A testamentary trust is often used to protect an inheritance from:

• Immaturity: a young adult receiving a large lump sum.
• Creditors or bankruptcy: a Beneficiary with debts or business risk.
• Relationship breakdown: an inheritance being drawn into a Beneficiary's property settlement.
• Vulnerability: a family member with drug, alcohol or gambling problems.

How it works in a RapidWills Will

If you select the testamentary trust option, you nominate the Beneficiaries, place their gift in the control of a trustee, and choose the age at which each Beneficiary receives the gift. Until then, the trustee manages the gift for the Beneficiary's benefit.

Good to know

• A court may overrule an age barrier, particularly if the age you set is a lengthy period after the Beneficiary turns 18.
• Testamentary trusts can have tax implications for the trust and its Beneficiaries. Speak with an accountant or lawyer if tax planning is a priority.
• If you want complex trust arrangements, such as a special disability trust or discretionary family trust, discuss your needs with an experienced lawyer first.