Will Including Testamentary Trust Template
This information is not legal information provided by Precedents Online or it’s Authors. It is for General Information only and to be used accordingly.
Preparing for your family’s future
No-one wants to think about death, but it’s important to decide what will happen to your assets when you die. Find out how you can give instructions to your family about your legal and medical preferences should you fall ill or lose the capacity to make those decisions yourself.
An estate plan includes your will as well as any other directions on how you want your assets distributed after your death. It includes documents that govern how you will be cared for, medically and financially, if you become unable to make your own decisions in the future.
You must be over 18 and mentally competent when you draw up the legal agreements that form your estate plan. Key documents might include:
- Superannuation death nominations (see Getting your super)
- Testamentary trust
- Powers of attorney
- Power of guardianship
- Anticipatory direction.
If you have made a binding nomination in your super or insurance policies, the beneficiaries named in those policies will override anyone mentioned in your will. If you have a family trust, the trust continues and its assets will also be distributed according to the trust deed, no matter what is written in your will.
Ask a legal professional to check your estate plan. A good estate plan should minimise the tax paid by your heirs, and help avoid any family squabbles.
A will takes effect when you die. It can cover things like how your assets will be shared, who will look after your children if they are still young, what trusts you want established, how much money you’d like donated to charities and even instructions about your funeral.
Your will can be written and updated by private trustees and solicitors, who usually charge a fee. Some Public Trustees will not charge to prepare or update your will if you nominate them to be the executor of your will. Other Public Trustees may only exempt you from charges if you are a pensioner or aged over 60. Check with the Public Trustee in your state or territory.
It’s estimated that nearly half of all Australians die without a will, or ‘intestate’. Don’t let this happen to you. Make a will today.
- NSW – NSW Trustee and Guardian
- Northern Territory – Office of the Public Trustee
- Queensland – The Public Trustee of Queensland
- South Australia – Public Trustee South Australia
- Tasmania – Public Trustee Tasmania
- Victoria – State Trustees Victoria
- Western Australia – Public Trustee Western Australia
You can buy will kits online but it’s a good idea to ask a solicitor to review your will to make sure everything is in order. If a will isn’t signed and witnessed properly, it will be invalid.
Keep your will valid and up to date as your legal rights change – specifically, if you marry, divorce or separate; have children or grandchildren; if your spouse or beneficiaries die; or if you have a significant change in financial circumstances.
If you die intestate or your will is invalid, an administrator appointed by the court pays your bills and taxes from your assets, then distributes the remainder, based on a pre-determined formula, which may not be how you intended your assets to be distributed.
If you die intestate and don’t have any living relatives, your estate is paid to the state government.
A testamentary trust is a trust set out in your will that only takes effect when you die. Testamentary trusts are usually set up to protect assets.
Here are some reasons why you would create a testamentary trust:
- The beneficiaries are minors (under 18 – 21 years old)
- The beneficiaries have diminished mental capacity
- You do not trust the beneficiaries to use their inheritance wisely
- You do not want family assets split as part of a divorce settlement
- You do not want family assets to become part of bankruptcy proceedings.
A trust will be administered by a trustee who is usually appointed in the will.
A trustee must look after the assets for the benefit of the beneficiaries until the trust expires.
The expiry date of a trust will be a specific date such as when a minor child reaches a certain age or a beneficiary achieves a certain goal or milestone (e.g. getting married or earning a specific qualification).
Appointing someone as your power of attorney gives them the legal authority to look after your affairs on your behalf.
Powers of attorney depend on which state or territory you are in: they can refer to just financial powers, or they might include broader guardianship powers. You will need to check with your local Public Trustee.
The different types of power of attorney are:
- General power of attorney is where you appoint someone to make financial and legal decisions for you, usually for a specified period of time, for example if you’re overseas and unable to manage your legal affairs at home. This person’s appointment becomes invalid if you lose the capacity to make decisions for yourself.
- Enduring power of attorney is where you appoint a person to make financial and legal decisions for you if you lose the capacity to make your own decisions.
- Medical power of attorney can make only medical decisions on your behalf if you become unable to do so yourself.
You can prepare a few other documents to help your legal appointees and family as you grow older, including an:
- enduring power of guardianship that gives a person the right to choose where you live and make decisions about your medical care and other lifestyle choices, if you lose the capacity to make your own decisions.
- anticipatory direction records your wishes about medical treatment in the future, in case you become unable to express those wishes yourself.
- advance healthcare directive (or living will) documents how you would like your body to be dealt with if you lose the capacity to make those decisions yourself.
The documents you choose to draw up will depend on your situation, and the responsibilities you’re happy to entrust to others. Get legal advice if you are not sure.
Choosing your powers of attorney
Nominate people that you know are trustworthy, financially responsible, and likely to be around when you need them.
A Will Including a Trust
A testamentary trust is a trust created by will and is usually a discretionary trust. The testator of a will creates a trust and directs the trustee to hold property in accordance with the terms of the trust for specified beneficiaries.
At some future time the trustee distributes the property to the beneficiaries of that trust. These trusts are often recommended by financial planners and accountants. They are very useful for parents of small children (minor beneficiaries).
Testamentary trusts tend to be driven more by the needs of the beneficiaries than by tax considerations. If a testamentary trust fails, the property will usually be held on resulting trusts for the testator’s residuary estate. A trust has two main advantages for a will maker and the nominated beneficiaries asset protection; and income splitting.