Testamentary Trusts are used strategically as a useful vehicle in estate planning and provide a means to facilitate flexibility.

A trust is an obligation where a person/entity (trustee) is legally bound to hold and deal with property for the benefit of others, the beneficiaries.

A testamentary trust is created by a Will and is activated as a result of death. With such a trust, the trustee can be given specific instructions on how the assets are to be distributed or the trustee can be given discretion.

Some advantages of Testamentary Trusts:

• They allow income and capital to be divided between beneficiaries, at the time and in amounts as determined by the trustee or deceased. This may make it possible to reduce tax.
• A trustee can direct distributions away from particular beneficiaries.
• The assets are protected if the beneficiary becomes bankrupt.
• The assets are protected from being split if the beneficiaries divorce.
• The assets can be guarded from spendthrift children.
• Trusts can be utilised to provide financial support for handicapped children.
• Trusts can protect assets from being included in the calculation of social security benefits.