To provide your Primary Beneficiaries with the ability to take their inheritance in whichever way they choose, you might consider incorporating a Beneficiary Controlled Testamentary Trust (BCTT) into your Will. That way, after you die, a Primary Beneficiary can instruct the estate Executor to pay some (or all) of their inheritance, to any one or more of the following:
• themself absolutely;
• a Testamentary Trust that is controlled by them;
• a Testamentary Trust that is not controlled by them;
• any of their children or grandchildren instead of themselves; or
• another trust which they (or their descendants) are beneficiaries of (or control).
The terms set out in the Will give Primary Beneficiaries flexibility and options, including the ability to:
• control the activities and investments of their own trust if they wish;
• minimise tax, and, use the benefit of the concessional tax rates that apply to minors;
• retain their inheritance for their descendants for up to 80 years (or longer in States where there is no rule against perpetuity) or wind the trust up earlier;
• appoint another person or company to be the Trustee of their trust;
• appoint someone other than themselves or a company, to have the power to remove a Trustee and appoint a new Trustee of their trust;
• protect their inheritance from being lost through bankruptcy;
• protect their inheritance in the trust from having an inheritance claim lodged after their death;
• run more than one trust. For example, if a Primary Beneficiary has more than one child, they can run parallel trusts and nominate:
a). which assets go into the trust;
b). who the income beneficiaries will be from those you have nominated in the terms of the trust;
c). who the capital beneficiaries will be from those named in the terms of the trust;
d). who will be the Trustee of each trust;
e). restrict the terms of the original trust or any parallel trusts (however, they can never expand on the terms of the trust set out in the will);
f). specify which of their descendants will have control of the trust (and any parallel trusts), after the death of the Primary Beneficiary; and
g). create a protective trust for any descendants who cannot manage their own affairs.
During the continuance of their trust, the Primary Beneficiary has the power to:
• take some assets out of their trust and keep the remainder in the trust;
• pay assets and income to themself or any other person named as a potential beneficiary of their trust; or
• take all the assets out of their trust and wind up the trust; and
• create separate testamentary trusts.
If the Primary Beneficiary leaves their inheritance in their own trust, then upon their death the assets in their trust do not form part of their estate. Their chosen descendants then inherit the trust and take control of it.
Scammell & Co have experienced Wills and Estate Planning lawyers who can tailor your testamentary trust Will to achieve particular objectives for both your estate and your beneficiaries.
For further information on Scammell & Co's Wills and Estate Planning services please follow the link HERE
*This information is current at the time of publication. For accurate legal advice, please contact Scammell & Co on 08 8440 270.
