A testamentary trust is a trust established by a Will and they can be very useful for asset protection, tax effectiveness and providing for minor children. The best thing about a testamentary trust is that you provide your future beneficiaries with many options around how your estate may be dealt with. Because the Trust is not established until death, there is no ongoing cost to having one in your Will.
Testamentary Trust for Young Children
This kind of trust enables an inheritance to be held on trust for a child until they are able to inherit the money in their own right. A child under the age of 18 can’t inherit, and in many instances, it is prudent to defer the inheritance until the child is ready to receive it.
A testamentary trust can be established to pass assets to a beneficiary at a certain age. For many people, 21 is seen as too young, and for larger estates, 30 is often considered appropriate.
Protective Testamentary Trust
Many people are simply not in a position to inherit large sums of money. In this situation, the Trustee provides for the care and lifestyle of the beneficiary who does not have access to the capital.
Another reason to use a protective testamentary trust is if a beneficiary is bankrupt, or where the beneficiary is in an occupation that has a high risk of being sued.