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Estate Planning
Estate Planning document

ClearWill with Testamentary Trusts

The Cleardocs Will with Testamentary Trusts allows a will maker to:

  • appoint an umpire;
  • appoint advisers to the executor(s);
  • make appointments in relation to existing trusts;
  • create any of the following trusts:
    • single or multiple testamentary discretionary trusts;
    • right of residence or use and enjoyment trust;
    • protected trust;
    • life interest trust;
    • superannuation proceeds trust;
  • provide for blended families; and
  • give executor(s) the power to adjust entitlements of beneficiaries.

Cleardocs also offers ClearWill Online which is available to all users and covers a wide range of scenarios.

$555.50
  • Cleardocs fee incl GST $555.50
  • + 50% off your subsequent orders of the same document package within 12 months
Product Benefits
  • Builds on ClearWill Online by incorporating additional features
  • Provides a flexible and long term approach to protecting assets
  • Allows flexibility in appointments - ensuring certainty in administration of the estate
  • Facilitates tax effectiveness through testamentary trust structures
  • Comprehensive will, avoiding disputes upon death or incapacitation
  • Option to pre-populate power of attorney orders
  • Includes copy function for address details - saving you typing
  • Extensive online help and local phone support
  • Easy to use question interface
Product Information

What documents are included in the Cleardocs ClearWill with Testamentary Trusts package?

The ClearWill with Testamentary Trusts document includes:

  • a Will which you can tailor to your client's instructions; and
  • an Establishment Kit explaining what to do next.

What information do you need to order ClearWill with Testamentary Trusts through Cleardocs?

Download our checklist of the information required to order ClearWill with Testamentary Trusts.

Who can make a Will?

Generally, in order to make a valid Will, the will maker must:

  • be over 18 years old;
  • have a sound mind, memory and understanding (capacity);
  • intend to make a Will;
  • know and approve of the contents of the Will; and
  • follow certain procedural formalities to establish the Will.

Who can be an executor?

An executor must be either:

  • one or more individual adults;
  • a licensed Trustee Company; or
  • a Public Trustee.

A public or private company cannot be an executor. If you want to appoint a licensed Trustee Company or a Public Trustee, then you should contact that body and ascertain their full and correct legal name before preparing your Will.

What is the role of an executor?

The executor deals with the deceased's person estate or assets. This includes:

  • locating the original Will;
  • assisting with and paying for the funeral;
  • determining assets and liabilities;
  • applying to court for a 'Grant of Probate' (this is the legal document issued by the court allowing the executor to deal with the estate);
  • ensuring that all the deceased's debts and taxes are paid and any liabilities discharged;
  • notifying beneficiaries of their entitlements; and
  • distributing the assets in accordance with the terms of the Will.

Information about the trustee

The main role of the trustee is to manage funds or assets that are being held on trust for the benefit of beneficiaries until the funds or assets can be distributed. The trustee is different from the executor although in most cases will makers appoint the same person or persons to both roles.

The trustee must:

  • act in accordance with the Will and the laws and duties applicable to trustees;
  • keep proper accounts and records of the funds held on trust; and
  • arrange for tax returns of the trust to be prepared and filed.

What is the role of a guardian?

The role of a guardian appointed under a Will is to make all major decisions about the welfare of children less than 18 years old. For example, where the child lives, medical decisions, education and religious upbringing.

Maddocks recommends that the will maker discusses their wishes with the guardian whilst they are able to do so. This will give the guardian an understanding of the will maker's wishes and the reasoning behind them.

Seek legal advice

The Wills information here should be considered general in nature, and in no way interpreted as legal advice. The summary on this page is for information purposes only.

A lawyer should advise their client on their particular circumstances and refer their client to an alternative adviser where required. The Will developed for a client should recognise that the Will only deals with estate assets owned personally by the client and attempt to balance the claims of:

  • current or former spouses or partners;
  • children of both current and former relationships;
  • persons who the will maker has an obligation to provide for; and
  • persons who might have a family provision claim against the will maker.
Frequently Asked Legal Questions

Cleardocs is not a law firm. So as with all the legal material on this site, the answers to these "frequently asked legal questions" are provided by the law firm Maddocks. Cleardocs does not endorse those answers.

Expand All

What is a testamentary trust? And what is a testamentary discretionary trust?

A testamentary trust is a trust established under a valid Will. It begins after the Will maker dies. A testamentary trust functions in a similar way to other common trusts, with certain provisions of the Will operating as a trust deed.

Some testamentary trusts operate for the benefit of only one beneficiary, for example, protective trusts which are discussed below. Other testamentary trusts operate for the benefit of more than one beneficiary, and sometimes confer on the trustees a discretion to decide the proportions in which beneficiaries receive distributions of income and capital.

The trustees also have a range of other discretions, such as when distributions are made, how assets are invested and so on. It is for these reasons that testamentary trusts are often referred to as testamentary discretionary trusts. These trusts may, of course, take many forms and confer a wider or narrower range of discretions on the trustee.

Read our case study about creating testamentary trust.

Does ClearWill with Testamentary Trusts allow for testamentary discretionary trusts?

Yes, a will maker can establish one or more testamentary discretionary trusts (TDT) through Cleardocs. Using ClearWill with Testamentary Trusts, a will maker might establish a TDT to:

  • give a specific sum of money or a specific asset (for example, a parcel of real estate) to a beneficiary in a TDT; and/or
  • give the whole estate or the residuary estate to:
    • one beneficiary in one trust;
    • multiple beneficiaries, being a defined group (for example, siblings or cousins) in one trust;
    • multiple beneficiaries in equal shares in a separate trust for each beneficiary; or
    • multiple beneficiaries in unequal shares in a separate testamentary trust for each beneficiary.

Can I appoint my lawyer, accountant or financial planner (or any professional person) as an executor and trustee?

Yes, you can appoint your lawyer, accountant or financial planner as an executor and trustee. However, you should ask them whether they are willing to act.

If you appoint your lawyer, accountant or financial planner (or any professional person), it is likely that they will request a clause be included in your Will that allows them to charge fees for work they undertake in their role as executor and trustee. The Cleardocs document package contains a suitable 'charging' clause.

For Victorian Customers

If you reside in Victoria and appoint a professional person, before executing your Will, you will also need to provide written informed consent to the professional person charging a fee. This product does not include the form of consent.

What is a right of residence trust?

A right of residence trust generally has the following characteristics:

  • a specific residential property is given to a trustee on trust to allow a specific beneficiary (or even a class of beneficiaries) to reside in the residence for a period of time following the will maker's death. The period may be:
    • the life of the specific beneficiary;
    • a specific period of time; or
    • until the occurrence of a defined event, such as the marriage of the specific beneficiary;
  • often the trustee will have the power, at the request of the specific beneficiary, to sell the residence and purchase a replacement residence;
  • this right does not generally extend to enabling the specific beneficiary or beneficiaries to receive income from the property, such as income received from renting the property.

What is a protected trust?

A protected trust is a trust that enables a will maker to quarantine all or part of their estate in a separate trust for the benefit of a specific 'protected' beneficiary, a class of beneficiaries and possibly future generations. Generally, the trustee has the discretion to use any part of the trust's income or capital for the benefit of the protected beneficiary.

Examples of situations where a protected trust may be appropriate include;

  • where the beneficiary has an intellectual disability;
  • where the beneficiary is vulnerable due to issues such as drug, alcohol or gambling addiction; and
  • where the will maker has other concerns about the beneficiary's ability to manage their financial affairs.

What is a life interest trust?

A life interest trust is a trust that enables a will maker to quarantine all or part of their estate in a separate trust and direct that a specific beneficiary, or a class of beneficiaries, receives income from the trust for their lifetime or a defined period of time.

As distinct from some other testamentary trusts, a beneficiary does not generally have access to the capital of the trust, but instead receives income (often at a specified rate) during their lifetime or defined period. On the beneficiary's death, the life interest trust is generally wound up and the assets distributed to the remainder beneficiaries.

What is a superannuation proceeds trust?

A superannuation proceeds trust is a trust that is set up to receive superannuation death benefits of the will maker following their death. Generally the trust is similar to a testamentary discretionary trust, however beneficiaries are limited to persons who were death benefit dependants (as defined by the Income Tax Assessment Act 1997 (Cth)) of the will maker at his or her death. If the only beneficiaries are death benefit dependants, then no tax is payable by the estate on the receipt of the death benefit.

What role does an Umpire have in a trust?

The Umpire's role in a trust is to resolve any disputes that may arise between trustees or between appointors. The Umpire has the ability to make a decision or refer a dispute to mediation or arbitration. It is important to have a clear and efficient dispute resolution procedure to ensure the management of the trust is not disrupted. Read our case study about benefits of appointing an umpire.

Can the will maker appoint successors to the trustee positions they hold?

A will maker can appoint successors to the trustee positions they hold provided the relevant trust deed says they can. Read our case study about benefits of appointing a trust position successor.

What happens if a specific asset is gifted to a person in a Will but that asset is subsequently sold or lost?

If a specific asset gifted in a Will is subsequently sold or lost, the gift fails.

To avoid this situation, you can:

  • leave a monetary gift; or
  • include a broader description in the gift clause, for example, 'any private vehicle I may own at my death' as opposed to specifying a particular make and model of vehicle.

In the circumstance where the asset was dealt with by a person appointed as power of attorney, the gift may not fail altogether. For further information, you should seek independent advice.

What are 'descendants in substitution'?

Descendants in substitution are generally the children and other descendants of a primary beneficiary of the trust. This means that if a beneficiary were to pass away before they became a primary beneficiary, their children can take the interest of their parent preserving a chain of inheritance for a particular line of a family.

Does the Will allow the executor to quarantine superannuation death benefits?

Yes, the Will allows the executor to quarantine superannuation death benefits into a restricted form of testamentary discretionary trust. Instead of the trust having a wide range of discretionary beneficiaries, the beneficiaries are limited to persons who qualify as death benefit dependants. This type of trust is often called a 'superannuation death benefits trust' or 'superannuation proceeds trust'.

Why would the executor want to quarantine superannuation death benefits?

Generally the beneficiaries of a superannuation proceeds trust are limited to persons who were death benefit dependants (as defined by the Income Tax Assessment Act 1997 (Cth)) of the will maker at his or her death. If the only beneficiaries are death benefit dependants, then no tax is payable by the estate on the receipt of the death benefit. If the executor does not quarantine the superannuation death benefits in such a trust, if any beneficiary who may receive the death benefit is not a death benefit dependant, then the taxable component of the death benefit may be taxed. Read our case study about quarantine superannuation death benefits.

Does the testamentary discretionary trust allow the executor to adjust the entitlements of beneficiaries?

Yes, the testamentary discretionary trust provides the executor with the discretion to adjust the entitlements of beneficiaries in the distribution of the estate assets. Examples include adjusting for superannuation benefits, or assets of an existing trust, which pass to a beneficiary outside of the estate.

Why should the executor have the power to adjust the entitlements of beneficiaries?

In some instances, the power of an executor to adjust the entitlements of beneficiaries is necessary to achieve the will maker's intentions.

This is illustrated by the following case study.

Tom has two children, John and Sue. Sue is aged 17 years and still lives with Tom and is dependent on Tom. John is aged 20 years and lives away from home and is no longer dependent on Tom. Tom's only assets are his home worth $600,000 and his superannuation worth $200,000. The superannuation is held in a retail fund. Tom intends all his wealth to pass equally to John and Sue. His Will leaves his estate assets to them equally. However, as superannuation is not an estate asset, the trustee of the superannuation fund may decide to pay the superannuation direct to Sue. Overall, John would receive $300,000 and Sue will receive $500,000. If the executor is able to adjust entitlements, John could then receive $400,000 from the estate and Sue would receive $200,000 from the estate and $200,000 from superannuation. The adjustment provision thus enables Tom's wishes to be achieved.

Should a will maker have one testamentary trust for all beneficiaries or multiple testamentary trusts?

The question whether a will maker should create single or multiple testamentary trusts must be considered on a case by case basis. Relevant considerations include:

  • having one testamentary trust for all beneficiaries would generally have less on-going costs (for example, accountancy fees) than multiple trusts;
  • it is arguable that one trust for all beneficiaries offers greater protection for the assets of the trust in the event of the bankruptcy or relationship breakdown of an individual beneficiary;
  • individual trusts where each primary beneficiary has effective control of their own trust is generally preferable where there may be concerns that multiple beneficiaries may not agree in the administration of one trust; and
  • individual trusts give greater autonomy to each beneficiary as to how they can pass on their entitlement in the event of their own death.

What is a minor's trust?

A minor's trust is designed to manage and protect assets for a child until they reach a specified age. Some minor's trusts are intended to provide funds to benefit a minor during childhood. Others may not allow any expenditure, with the goal being simply to hold and protect funds until the minor reaches adulthood.

Some trust deeds specify that trust funds may only be used for specific purposes, such as education, or medical expenses, particularly in instances where a minor has a disability or illness.

A minor's trust can be created by a person to operate during their lifetime or alternatively, upon their death by a provision in their Will. If created by a Will, any income received by the minor is generally taxed at normal adult rates and not the penalty rates which apply to unearned income received by minors from other sources.


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