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3 Generational Testamentary Trust Wills – Do They Work.

Article by WealthSafe.

Date Published: 14 May 2013

Everyone knows that you need a will. And without one, you leave your loved ones vulnerable, writes Warren Black.

Sadly, a huge percentage of people do not have the right kind of will. From my experience, that number is as high as 90%.

What do I mean by the ‘right kind of will’? Isn’t there one kind of will?

Not at all. There are simple wills, like the ones at the post office (or the three pages wills from the local backyard lawyer). But there are also “Three generational testamentary trusts “. These are wills for people with lots of assets, or people who can’t stand the thought of a nasty ex-spouse, or cheating daughter or son-in-law, getting a slice of their hard-earned wealth.

This leaves one important question.

What are they and do they really work?

“Three generational testamentary trusts” are sophisticated wills with special testamentary trusts (like glorified family trusts) in the will. They ensure that you are protected in three important situations:

1. Taxation.

2. Family Court.

3. Bankruptcy.

They protect against taxation because you can end up with nasty capital gains tax or stamp duty tax issues with a normal will. For example, if Fred and Mary have three children, and the children decide to do things differently between themselves from what the will says, this triggers taxation issues. Whereas a “Three generational testamentary trusts” allows the three children to change the way the assets are allocated with no tax issues at all.

They protect against the family court because you can end up with a son-in-law or daughter-in-law getting a share of your assets. Let’s assume Fred and Mary’s 28-year-old son Alex had a nasty marriage break up with his wife Sally three months before the car accident that killed Fred and Mary. Alex’s one-third share of his parents’ assets can be used by the Family Court in working out how much Sally should get. A horrific thought for Fred and Mary and a risk that can be seriously reduced with a proper will…

They protect against bankruptcy because a bankrupt son or daughter will not get their rightful share of your assets. Instead, they will end up with the people they owe money to. So let’s assume that Fred and Mary’s daughter Kelly (age 31) goes bankrupt one year before the car crash that killed Fred and Mary. Kelly’s one-third share will simply go straight to the people who owe her money. Again, a proper will could have avoided this happening, and ensure that Kelly had a fresh start when she came out of bankruptcy.

So What Next?

It goes without saying that when planning for your death, through estate planning, ensure that you get the right kind of will. Don’t just go to any lawyer. Most lawyers have no idea how to do this kind of thing.

You need to ensure you have a 3 generational testamentary trust will that gives you:

1. Tax savings.

2. Family Court protection.

3. Bankruptcy protection.

At Wealth Safe, we’re here to help you with all your asset protection, tax planning, business structuring and superannuation needs. We work with you to find the best strategy to keep your assets safe, slash your tax 100% legally, and put more money in your pocket.

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