Legal Tip 332: Why the initial trustee of a Testamentary Trusts is not usually a company?

Discussion in 'Wills & Estate Planning' started by Terry_w, 25th Feb, 2021.

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  1. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Testamentary trust are trusts set up in the will of a deceased person. They don’t actually begin until after the death, and actually after the executor has administered the estate.

    Ideally the trustee of a Testamentary Discretionary Trust (TDT) would be a company, but setting up a company in advance will be costly as most people don’t know what long they will live. Imagine setting up the company now when you might live for another 50 years. That would be a lot of ASIC fees over the years.

    Therefore the will usually will specify an individual as the intital trustee with the appointor having the power to change the trustee. When the testator actually dies the appointor can then change the trustee to a company before property is transferred to the trustee.
     
    Terry_w, 25th Feb, 2021
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