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How do testamentary trusts work? And can I contest the Will?

Testamentary trusts are complex estate planning structures that enable people to provide for loved ones without giving them direct access to the assets.

But what if you are unhappy with the way the deceased distributed their estate through a trust? Can you contest the Will? The answer depends on the individual circumstances of your claim, so let’s first examine trusts in more detail to understand how an inheritance dispute might unfold.

How do trusts operate?

Setting up a testamentary trust is a complicated area of law and you require an experienced Wills and estates expert to help you. They are generally included in the Will and only come into force once the testator passes away.

The Will-maker chooses a trustee who has discretion over how the trust’s assets are distributed to beneficiaries. Trustees may be individuals or organisations the testator has faith in to appropriately carry out their last wishes.

Some people set terms in their Will that prevent beneficiaries from accessing any money until they meet certain criteria, such as reaching a certain age or getting married.

What are the benefits of a trust?

Everyone has different reasons for setting up trusts in their Will. Common benefits include:

  • Tax efficiency.
  • Asset protection from liability claims, divorces and remarriages.
  • Ensure education and maintenance of young children.

Many people also use trusts to provide for beneficiaries who are disabled or otherwise incapable of managing their own financial affairs. Furthermore, Will-makers may worry loved ones could waste their inheritance, which trusts can help prevent.

Can I contest the Will?

Under the Succession Act 2006, certain eligible people can pursue family provision claims if they feel a loved one failed to adequately provide for their future.

Even assets set aside for a testamentary trust can be made available, particularly if the courts feel the deceased used a trust in an effort to escape their moral duty to provide for their family.

Nevertheless, each case is different and claimants must enlist the services of specialist contesting Wills lawyers to have the best chance of a favourable outcome when challenging assets held in a trust.

A recent NSW Supreme Court case resulted in a daughter unsuccessfully contesting her mother’s Will when she became unhappy that her father continued to receive an income stream from the estate through a trust. You can read our summary of the case here.

Would you like to discuss your testamentary trust claim with an expert? Please contact Gerard Malouf & Partners Will Dispute Lawyers today for a free consultation.

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Contesting Wills
 — Gerard Malouf & Partners

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