The 3 types of testamentary trusts: Tailored to your beneficiaries’ needs

A testamentary trust is quite a sacred concept. Imagine a lifetime spent working to leave enough behind for your loved ones and entrusting it to people (trustees) whom you may never have met. It’s a pretty big deal.

The 3 types of testamentary trusts: Tailored to your beneficiaries’ needs

A trust is defined as a relationship in which the holder of assets gives it to another person or entity who must keep and use it solely for another’s benefit. A testamentary trust is established upon the death of the testator and is specified in their will. It is intended solely for the testator’s beneficiaries. 

There are different trusts tailored to different needs, and this is where expert advice is invaluable. So, what are the 3 types of testamentary trusts?

Children’s trust

A children's trust is designed to protect the financial future of minor children. A trustee or entity oversees asset management on behalf of the children until they reach a set age or milestone as outlined in the will. The trustee must manage these assets in the best interests of the beneficiaries.

Funds held in the trust are intended for essential needs like education, healthcare, housing, and general welfare until the money is eventually transferred to the children.

Children’s trusts provide parents with the assurance that their children will have a stable financial foundation should they no longer be around.

Capital Legacy’s own Legacy Children’s Trust™ remains in force until the children reach the age specified in the will or until they are mature enough to manage their finances. It's classified as a Type B testamentary Trust, allowing for beneficial tax exemptions.

Widow’s trust

A widow's trust safeguards a surviving spouse, particularly if they have limited financial knowledge or capability. Usually, the spouse becomes the exclusive income recipient for their lifetime, ensuring financial security while retaining the capital for eventual distribution to the children – should this be the case.

This trust demonstrates diligent estate planning, guaranteeing sustained financial security for the surviving spouse and preserving the family’s legacy.

The terms for distributing income to the surviving spouse are outlined in the will. This can include regular income payments or lump-sum distributions to cover essential expenses.

Our Legacy Widow’s TrustTM acts as a vital safety net, alleviating the financial burden on surviving spouses and allowing them to focus on rebuilding their lives after a great loss. 

Provider’s trust

A provider's trust is created to secure continuous financial assistance for someone who may lack the means to independently support themselves or handle their financial affairs. Provider's trusts are vital for safeguarding dependents like special-needs children, elderly parents, or individuals with disabilities. 

This is especially important as specialised care is often required. The Legacy Provider’s TrustTM ensures that guardians or other family members do not squander these beneficiaries’ inheritance.

Having considered all of this, the concept of a testamentary trust is certainly one that calls for careful consideration. And with each of these, it’s the trustees’ sole responsibility to ensure that inheritances are protected and managed according to the testator’s will. 

Who will you trust to safeguard your loved ones’ inheritance?

At Capital Legacy, our purpose-driven trusts are managed by professional trustees who have extensive experience in this field and genuine concern for the well-being of the beneficiaries. It’s safe to say that what you leave behind for your loved ones is in safe hands. It all starts with the will.

Contact us today for your complimentary will-drafting consultation or for more information on our legacy-planning products.

Whether you’re in need of a will, life insurance, education cover,
or the power of all three, we have got you covered.