A testamentary trust will provides advantages over a simple will. It can minimize taxes through a trust structure. It protects assets from beneficiaries' creditors through bankruptcy or marriage breakdown by holding assets in trust. It can ensure equal distribution of assets, including superannuation, contrary to a simple will. It also allows imposing conditions to protect vulnerable beneficiaries. Appointing roles like appointor and protector aim to protect the primary beneficiary's interests. A testamentary trust will can thus provide greater asset protection and tax benefits than a simple will.

1. What Is A Testamentary Trust Will?

2. Testamentary Trusts Wills
Should you have one in your will?

3. Definition Of
Testamentary
Trusts
• Any trust established under a will is known as a "testamentary trust“
• Testamentary trusts operate like discretionary trusts with added advantages.

4. Office Holders In
Testamentary
Trusts
• Appointor
• Protector
• Trustee

5. Appointor
• A right Appointor is critical
because the Appointor can
‘hire and fire’ the trustee.
• You can appoint your
executor or someone else as
the trust Appointor.

6. Protector
• The Protector aims to protect the
interests of the primary beneficiary
against improper actions by the
trustee.
• The Protector has a power of veto —
the power to refuse consent - over a
range of substantial actions by the
trustee.
• The beneficiary could be the protector.

7. Trustee
• The trustee holds the
legal title to the trust
assets on behalf of the
beneficiaries.
• The trustee can be a
relative, a friend or a
professional trustee.

8. Common Problems
With Simple Wills
They do not deal with:
• Superannuation
• Life insurance
• Companies
• Trusts
• Do not have an equalisation clause
• Do not provide asset protection
• Do not minimise tax

9. Simple Will –
Tax Issues
• Gift is received absolutely.
• Any income generated by that
gift will be taxable.
• The higher the beneficiary's
income is, the higher the tax
payable by the beneficiary will be
on income generated by the
inheritance gift.

10. Testamentary
Trust – Minimise
Tax

11. Simple Will - No
Asset Protection
• There is no protection for
beneficiaries who experience any of
the following:
• Business failure
• Gambling debts
• Sued professionally
• Addiction
• Spendthrift tendencies
• Family breakdowns.

12. Testamentary Trust - Asset Protection
• Assets held in a trust are
protected from the
bankruptcy of a
beneficiary.
• Protection can also be
afforded in cases of a
beneficiary's marriage
breakdown if that
beneficiary does not have
any control over the trust.

13. Simple Will - Super Issues
• Intention may have been to divide the estate equally between the
beneficiaries.
• But a dependent beneficiary sometimes receive the super in addition
to their share under the will.
• This may result in unequal distribution of the estate contrary to the
testator's intentions.

14. Testamentary Trust - Super
• Has an equalisation clause.
• Has a clause having regard to both, estate and non-estate assets.
• Achieves overall equality and proportionality.

15. Simple Will -
Loans

16. Testamentary Trust
Preservation Age
• The key benefit of a
testamentary trust will be
that upon reaching the
preservation age a
beneficiary can choose
whether to take their
benefits directly or to have
them held in trust for
them.
• The preservation age is
chosen by the testator.

17. Testamentary Trust- Vulnerable Beneficiary
• Only a testamentary trust can impose special obligations,
conditions and restrictions upon the trustee for the provision of
long-term care for a vulnerable primary beneficiary.
• A beneficiary with a physical or mental handicap, or an addiction
to drugs or alcohol is vulnerable.

18. Do You Want To
• Minimise the tax liability of your
estate
• Protect your estate from the
marriage breakdown of a
beneficiary
• Protect your estate from the
bankruptcy of a beneficiary
• Protect your estate from disputes
and litigation
• Protect the gifts to a vulnerable
beneficiary

19. A Simple Will May Not Provide The
Protection That You Require.
• Call 9221 2888 ; or
• Contact Mr Raymond Tan via email
(Raymond.Tan@tanandtanlawyers.co
m) if you want to learn more about
testamentary trusts.
• Visit www.tanandtanlawyers.com for
more info.
• Also
http://tanandtanlawyers.blogspot.com
/
• Slide prepared by Ken Tse 2021