When there’s a Will, there’s a way
As the nation’s baby boomers begin to retire en masse, people who may have previously opted for a basic Will are now looking to more sophisticated options to protect family assets that will be inherited by their loved ones, according to Mellor Olsson Lawyers partner Phil McGovern.
“To protect an inheritance and minimise the impact of tax for the benefit of family members, we often recommend people consider putting a Testamentary Trust Will in place,” he said.
Also referred to as a Contemporary Estate Planning Will or an Intergenerational Testamentary Trust Will, this type of Will is designed to both protect inherited assets and provide tax benefits for the intended beneficiaries through income splitting and superannuation, with each beneficiary receiving his or her inheritance via a testamentary trust instead of personally.
“For instance, inheritance assets under a discretionary Testamentary Trust Will can be ‘quarantined’ to protect them against any future claims from creditors or in a challenging financial situation like bankruptcy,” McGovern explained.
“This is because those assets are not owned personally by the Will beneficiary, but by the testamentary trust, which is in turn fully controlled by the Will beneficiary.”
Lasting up to 80 years after the death of the Will maker, these types of Wills are best set up by liaising with both a financial planner and lawyer to ensure an optimal result is achieved.
“Professionals and people involved in business usually want to receive their inheritance in a protected or quarantined manner and not in their own name,” McGovern said.
“Testamentary Trust Wills provide Will beneficiaries with flexibility and choice that a normal or standard Will simply cannot match, and they're not just for the wealthy.”
Recommended for you
ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test.
Quarterly Wealth Data analysis has uncovered positive improvements in financial adviser numbers compared with losses in the prior corresponding period.
Holding portfolios that are too complex or personalised can be a detractor for acquirers of financial advice firms as they require too much effort to maintain post-acquisition.
As the financial advice profession continues to wait on further DBFO legislation, industry commentators have encouraged advisers to act now in driving practice efficiency.
