How to activate a Testamentary Trust after death – Taxing Testamentary Trusts



After your client dies, how does the accountant activate a Testamentary Trust? Taxing Testamentary Trusts

Your deceased client may have had the foresight to provide their beneficiaries with the option of putting the inheritance into Testamentary Trusts. A Testamentary Trust is a trust contained in a Will. It is part of the Estate Planning process. Taxing Testamentary Trusts is a process best left to the accountant.

Taxing Testamentary Trusts

Minors pay reduced taxes in Testamentary Trusts. Talk to your accountant about taxing Testamentary Trusts.

A Testamentary Trust is designed to minimise tax. One of the advantages of a Testamentary Trust is that the tax payable on the income earned on the estate or capital gains tax payable is paid by a, often, wide variety of persons. Also, minors such as grandchildren and great-grandchildren pay the lower more favourable adult tax rates. This is under section 102AG ITAA 1936. This overrides the 66% tax rate for children contained in Division 6AA ITAA 1936.

Your client has died. In their Will there is either a:

* 3-Generation Testamentary Trust; or

* Testamentary Trust

In our letter of advice we:

1. Review the terms of the different types of death trusts in the Will.
2. Provide you with the mechanism to set up each Testamentary Trust.
3. Advice on what assets should and should not go into a Testamentary Trust.
4. Provide you with the required Minutes to set up a Testamentary Trust.
5. Explain what a Primary Beneficiary is.
6. Explain how to apply for a Tax File number.
7. Provide advice on the naming conventions for each Testamentary Trust.
8. Advise whether more than one Testamentary Trust can be created for each Primary Beneficiary.
9. Provide you with a comprehensive letter on what you need to do.

The cost for the above is $5,500. However, if it is a Brett Davies Lawyers or Legal Consolidated Will then the cost is reduced to $3,300.

To instruct us. Email us a copy of:

1. Will in full (generally attached to the Grant of Probate or Letters of Administration with the Will Annexed)
2. Any codicils
3. Death Certificate
4. List of assets and liabilities
5. Full names and current addresses of each of the Primary or main beneficiaries
6. Credit Card: Name on Card: ……………………….. Card Number: ……………………….   Expiry Date: …………………….
7. Full name of your Accountant, Lawyer or Adviser. As a private tax law firm we only work with your professional adviser: ………………………………

The process of setting up and taxing Testamentary Trusts is best left to your Accountant.

Speak to your financial adviser and accountant about building a 3-Generation Testamentary Trust online here.

Telephone us for more advice.

Adjunct Professor, Dr Brett Davies, CTA, AIAMA, BJuris, LLB, Dip Ed, BArts(Hons), LLM, MBA, SJD
Legal Consolidated Barristers and Solicitors
Australia wide taxation law firm
Mobile: 0477 796 959
National: 1800 141 612
Email: [email protected]
Skype: brettkennethdavies


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