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Advantages

  • The trust deed has withstood the test of time
  • Reduce administrative and management costs and trouble
  • The concessions under s 102AG of the Income Tax Assessment Act 1936 apply and minors can receive income from the excepted trust property taxed at normal adult marginal rates if the trust deed permits the trustees:
    • to accept excepted trust property
    • to hold such excepted property separately from other trust assets

Disadvantages and Risks

  • An unintended person or entity may take control of the trust on the death of the willmaker
  • The deed may not contain sufficient powers for the trustee to carry out the willmaker’s wishes
  • The intended person or entities may be ineligible beneficiaries
  • The gift may not enjoy the full 80 years but only the remaining life of the trust
  • The trust may be wound up after the date of the will and before death
  • It may be inappropriate for the trust to receive any gifts because it has been exposed to risk
  • The trust deed may not permit the trustee to hold the gift as a separate fund
  • The trustee may mix the gift with other trust property and be unable to identify income produced by the gift
  • The law treats the terms of the existing trust as being incorporated in the will. Trust changes after the signing of the will will have no effect regarding the testamentary gift. In practice a second trust would come into existence