Understanding setup of a testamentary trust

Hi

I've got a draft copy from my lawyer for setting up a testamentary trust within my will.

much of it is in legal speak above my laymans terminology,

I'm hoping there may be a reference somewhere on do's and don't that I should ensure are in the will, (at the time of death the trust will kick into action for the kids.)
What are the key points that I should ensure is worded in the trust....

 

Without meaning to be blunt, isn't this exactly what you are paying the lawyer for? Did you talk about what you wanted to achieve by setting up a testamentary trust, so that he could explain what clauses would then reach this outcome?

 

it entirely depends on your circumstances and what you are after. I have written a few threads on testamentary trusts - look under my legal tips posts.

Some things to consider
- should the trust be optional?
- more than one trust?
- who should be the trustees and the appointors
- what are the powers of the trustee and should they be given very broad or limited powers
- ways to maximise the trust, to maximise tax effectiveness.

This is what you are paying the lawyer for - to go through you situation, guide you and then draft the will and amend after discussion. The will itself is only a small part of what you are paying for.

 

Ask your lawyer about using a bloodline trust or a legacy trust.

I like them a lot. Different people have different issues but if you have assets you want to bequeath to lineal descendants (not outlaws) then I think they are good.

 

Limiting the beneficiaries to lineal descendants can be good but it can limit the tax effectiveness too. E.g. your son may marry a non working spouse.

 

Spot On... The A4 pages are likely a precedent document with several options and alternatives. It will be customised to your needs. The preliminary discussions to determine your needs and the options you choose and those you discard and then the final understanding are the most important elements. Tell your lawyers that you dont understand and ask for their explanations

 

Btw if you don't understand a will and sign it then it will be invalid. One of the supreme court justices raised this in a talk given a few years ago. It is only a matter of time before a complex testamentary trust is challenged because of lack of capacity with the testator not understanding what they are doing.

A valid will can also be attacked under family provision law. Leaving everything via a trust for someone is not adequate provision. So this must be considered.

 

I encountered a will last week. Old italian family and dad left all assets to his eldest son (like it was written in 1950) Legal advice suggested it was all easily contested. Estate is now a mess as siblings have all told elder brother that it wont go unchallenged.

 

Yes left out children could challenge this under family provision sections of the succession act. Almost a certainty they would succeed

 

@Terry_w Can a will be updated by someone who has a POA if the person lacks capacity?

 

No

 

A POA is generally an authority to make some financial / business decisions. Not more. If the POA is non-enduring it may have lapsed with the persons capacity too.

And what about the persons guardianship issues ? Guardians make lifestyle choices. No guardian may mean the Govt or another person gets to make those choices NOT a relative or a spouse.