Testamentary trusts are simply trusts made by testamentary instrument (normally a Will).
Testamentary trusts can be:
- simple – allowing estate assets to be held until children reach 18 for example with power to apply for the maintenance education and advancement in life of the child
- discretionary – providing the trustee with discretion about how income or capital is applied (effectively allowing income splitting, children under 18 enjoying adult tax free thresholds and accordingly significant tax savings)
- protective – ensuring that income or capital is only used for particular people or purposes (effectively protecting wealth from marriage or relationship breakdown or bankruptcy)
- special disability – seeking to preserve other pension entitlements
And sometimes testamentary trusts are a combination of all of the above. It makes sense to take advice from one of our experienced Estate Planning and Will making lawyers.