Wills – Standard Will vs Testamentary Discretionary Trust Will

A standard Will allows for an inheritance to be held on trust for a child until they reach a certain age, for example, 25 years.

Under that trust, a child can as follows:

1. Demand money when they turn 18, even if the Will says it is held on trust until they turn 21;

2. There is no asset protection benefit from a relationship breakdown or any bankruptcy risks;
   

3. There is no tax flexibility;
   

4. A child can receive approximately $22,000.00 tax free income each year until they turn 18;
   

5. Depending on the terms of the Will, there may be limited flexibility to deal with the inheritance funds until the trust ends.

In comparison, if an inheritance is held on trust for a child by a Testamentary Discretionary Trust Will then:

1. A child cannot demand money when they turn 18;

2. The trust can last for up to 80 years;

3. The inheritance has increased protection from relationship breakdown and bankruptcy risks;

4. All minors can receive approximately $22,000.00 tax free income every year for the life of the trust;

5. It offers significant income tax flexibility;

6. There’s lots of flexibility to deal with inheritance funds, for example, grant a low interest secured loan to discharge a bank mortgage;

7. A child can take over control of the trust at an appropriate age.