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From: Scott Elsom
This is probably not as exciting as a discussion about your next deal...but...I think it's an important part of investing.
I have just gone through the process or restructuring our Family Trust and during the process we went over our wills. Our Wills are fairly simple...if I die, it all goes to my wife...if she's dead it all gets split amongst the kids..and so on.
My solicitor pointed out that because so many of our assets were income producing, we should consider having Testamentary Trusts created upon our deaths. I have known about these for many years, but had thought that they did not apply to our situation. It appears that they do apply to us and probably to others on this forum.
According to my solicitor the big advantages of a Testamentary Trust are:
1. Distributions to children from Testamentary Trusts are taxed at adult rates instead of the 60-odd percent child rate (this would be a great mechanism for tax minimisation for my family should I drop dead tomorrow).
2. CGT is deferred if assets are left to a Testamentary Trust (no transfer of ownership, therefore no CGT).
3. If my kids get married and divorced, the assets in and income from the Trust are normally not included in divorce settlements.
4. Every time the beneficiaries of the Trust give themselves a distribution they will think of me
The other advantages (and disadvantages) of a normal trust (Family, Unit, etc) all apply.
My Questions...
1. Does anyone have provision for a Testamentary Trust in their Will?
2. Why did you choose (or not choose) a Testamentary Trust?
3. Why don't the Guru's (or other Investors)ever discuss Estate Planning? It seems pretty relevant to me. Perhaps it doesn't draw the crowds like the other aspects of the game? (cynical by nature - sorry!)
Scott
This is probably not as exciting as a discussion about your next deal...but...I think it's an important part of investing.
I have just gone through the process or restructuring our Family Trust and during the process we went over our wills. Our Wills are fairly simple...if I die, it all goes to my wife...if she's dead it all gets split amongst the kids..and so on.
My solicitor pointed out that because so many of our assets were income producing, we should consider having Testamentary Trusts created upon our deaths. I have known about these for many years, but had thought that they did not apply to our situation. It appears that they do apply to us and probably to others on this forum.
According to my solicitor the big advantages of a Testamentary Trust are:
1. Distributions to children from Testamentary Trusts are taxed at adult rates instead of the 60-odd percent child rate (this would be a great mechanism for tax minimisation for my family should I drop dead tomorrow).
2. CGT is deferred if assets are left to a Testamentary Trust (no transfer of ownership, therefore no CGT).
3. If my kids get married and divorced, the assets in and income from the Trust are normally not included in divorce settlements.
4. Every time the beneficiaries of the Trust give themselves a distribution they will think of me
The other advantages (and disadvantages) of a normal trust (Family, Unit, etc) all apply.
My Questions...
1. Does anyone have provision for a Testamentary Trust in their Will?
2. Why did you choose (or not choose) a Testamentary Trust?
3. Why don't the Guru's (or other Investors)ever discuss Estate Planning? It seems pretty relevant to me. Perhaps it doesn't draw the crowds like the other aspects of the game? (cynical by nature - sorry!)
Scott
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