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Trusts have been used by individuals for hundreds of years for many and varied reasons with the most common forms of Trust being inter vivos Trusts (established during your lifetime) and Testamentary Trusts (established after you have passed away).

Purpose of Trusts

Whether it be an inter vivos Trust or a Testamentary Trust, the common purpose for such Trusts is to protect assets for the benefit of the nominated beneficiaries.

Inter Vivos Trusts

Today the most common form of inter vivos Trusts is a Discretionary Trust, often referred to as a Family Trust.

In addition to being used for asset protection purposes, these forms of Trust can also be used to split income amongst the beneficiaries of the Trust thereby reducing the overall tax impact of the income received by the Trust.

Testamentary Trusts

A Testamentary Trust is a discretionary Trust established under a Will which does not come into effect until after the death of the Will-maker. Testamentary Trusts can provide considerable benefits as they can be controlled in certain circumstances by the beneficiary without bringing the assets of the Trust into the beneficiary’s personal Estate.

Is a Testamentary Trust different from a Discretionary Trust

The main difference between a Testamentary Trust and a Discretionary Trust is the ability to allocate income to infant beneficiaries (under the age of 18 years) which is taxed at normal adult rates rather than the higher tax rates that apply to minors when allocating income to infant beneficiaries under a Discretionary Trust.

What we can offer

Advice as to how a Discretionary Trust might be beneficial to your circumstances during your lifetime and to ensure that the Trust is set up correctly.

Discuss whether the use of Testamentary Trusts as part of your Estate Planning might be advantageous.

Review of Trusts

Commonly when undertaking Estate Planning for clients we review their Family Trusts and often find that the Trust is defective for various reasons including:

  • the Trust has not been properly executed;
  • the Settlor of the Trust is a beneficiary of the Trust;
  • all the roles are held by the one person;
  • the Vesting Date of the Trust has already passed;
  • allocations of income capital are being made to persons who are not beneficiaries under the Trust.

All of these issues can have serious consequences and therefore the review of your Trust documents is critical to ensure that not only is the Trust effective but also that the Tax Department cannot declare a distribution to be ineffective and go back and re-allocate income that you thought had been correctly allocated to beneficiaries with the resulting tax implications

Why Bell Legal Group?

Our team is here for you. We take the time to understand your needs, and we don’t use a one-size-fits-all approach when it comes to preparing appropriate Trust documents. We carefully consider every aspect of your personal and financial situations, before implementing a proposal that ensures the best possible outcome for you and your family.

Don’t leave your future to chance.

Talk to us. Talk to Bell Legal Group.

We’re here for you.