A trust is an arrangement where a designated person (the trustee) holds and looks after property or money for the benefit of another person or persons (the beneficiaries).
A testamentary trust is any trust created by a Will, which means that it will only come into effect after the death of the Will-maker.
Often a testamentary trust is included in a Will to address the specific circumstances of beneficiaries. For example, a minor’s inheritance can be held in a trust until they reach adulthood.
A testamentary trust may also be useful for beneficiaries who:
- suffer from a disability and are unable to manage their own affairs
- lack financial skill and may waste their inheritance if it is paid to them directly
- are bankrupt or at risk of bankruptcy
- earn significant income and would benefit from sharing income from their inheritance with other family members
- are at risk of marital separation and would like to avoid their inheritance being divided with their separating spouse.
Establishing a testamentary trust requires detailed thought and planning and you will need advice from an experienced wills and estates lawyer. If you are considering setting up a testamentary trust, D&D can assist you in a way that is understandable and achieves your estate planning objectives.
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