When should I include a trust in my Will?

Trusts can be adapted to a variety of situations when preparing Wills, says Trent McGregor, Associate and estate planning specialist with Robertson Hyetts Solicitors and Conveyancers.

Described very simply, a trust is a way of giving control of assets to one person and directing that person to hold them for the benefit of someone else.

“There are many different types of trusts, and each has a particular use”, explains Trent.

As a starting point, testamentary discretionary trusts are common, because they give strategic tax planning opportunities and asset protection to beneficiaries . “This can be extremely useful to protect against a family law challenge, for example,” says Trent. Testamentary discretionary trusts are also a valuable strategy when considering beneficiaries who are high income earners, or who run their own business.

Trent notes that discretionary trusts can be modified. For example, a discretionary trust can be altered to suit a farming family by directing that the farm should be run by an on-farm family member who should make regular payments to non-farming family members.

Trent explains that life interests and rights to reside are types of trust which can be used to provide an income or a residence for a surviving spouse, whilst ensuring that capital is retained for other beneficiaries. “This is particularly useful for so-called ‘blended families’, where couples each have children from previous relationships. Here, the couple give each other a ‘right to reside’ in their family home and direct that, once they have both died, the house is sold and the proceeds split amongst the next generation.”

Charitable trusts can be used to distribute assets amongst certain charities, or for a certain cause. Trent says that there are tax benefits of structuring gifts via a charitable trust. “We have also seen charitable trusts bring families together to discuss which charities should receive a benefit each year. It can create a wonderful tradition to pass on to future generations.”

A protective trust, used in conjunction with a Special Disability Trust, can ensure a vulnerable family member receives assistance to manage their inheritance, whilst also preserving access to a Disability Support Pension. “It’s one of the few strategies left permitting access to a pension whilst still allowing use of trust assets”, says Trent, noting that pension laws have changed to shut down other common strategies involving trusts and the aged pension.

We can conduct meetings by telephone, video conferencing, and home visits. To discuss your wills and estate planning with Trent, please contact our office on 03 5434 6615, or trent.mcgregor@robertsonhyetts.com.au