One of the most significant advantages to establishing a Testamentary Trust within your Will is that your trustee has powers to maximise the benefit your whole family from your assets taking into consideration greater tax burdens which some beneficiaries might face.
Tax must be paid on any income or interest earned from investments in a deceased estate at the beneficiary’s own marginal tax rate.
For example if interest of $40,000 is earned through investments made from estate monies valued at $500,000 a beneficiary spouse may pay tax on that interest of $6,600.
However, if the same amount of interest was earned via a Testamentary Trust and split amongst several beneficiaries, including minor children, then it is possible to avoid payment of tax. That saving would occur in each and every year the investment is maintained.
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