Complex Wills
Complex Financial And Family Affairs With High Net Worth
A “complex will” differs to a “simple will” as it takes into consideration additional assets or circumstances that may apply to a person, such as a business or company, care of children and contingencies should unforeseen circumstances arise when you pass away.
A complex will can be beneficial where a person has complex financial and family affairs and/or a high net worth but want to ensure that their estate is administered in a manner that benefits their beneficiaries upon their passing with the least amount of tax burden.
Testamentary discretionary trusts
Often, a complex will includes the creation of a testamentary trust. The testamentary trust is a discretionary trust which provides the trustee with full discretion as to who benefits under the trust and to what extent they benefit.
There are several key benefits of creating a testamentary trust, including:
1. Asset protection
Assets can be purchased under the testamentary trust. By doing so, this ensures that the assets remain within the family, as intended, and can be used to benefit family members. A testamentary trust also provides the control to the trustee to ensure that a beneficiary does not misuse the assets within the trust.
For your beneficiaries, this provides them with a form of protection if they were to fall into a situation where their assets would be at risk as the assets are not in their personal names.
Situations where a beneficiary would be at risk can include:
- Marital and/or relationship breakdowns and property settlement;
- Bankruptcy (particularly those involved in highly leveraged businesses); and/or
- Their children inappropriately managing or wasting their inheritance
2. Income splitting
Significant tax advantages are available for testamentary trusts.
These include:
- The removal of punitive tax rates of unearned income (e.g. investment dividends, interest, etc) for children – that is, ordinary tax rates will apply where the income is distributed from a trust estate created under a Will
- Distribution of income gains, capital gains and franked dividends earned from the estate assets amongst family beneficiaries annually in a tax-efficient method
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