Testamentary Trust
A testamentary trust, also known as a will trust, is a trust that is created by a will and comes into effect upon the death of the testator (the person who made the will). It is a common estate planning tool used in Hong Kong to manage and distribute assets to beneficiaries in a flexible and controlled manner.
Here are some of the key features of testamentary trusts in Hong Kong:
Established by will: The trust is created by the terms of a will, and the will must be admitted to probate before the trust can be established.
Assets transferred upon death: The assets that are to be held in the trust are transferred to the trustee upon the death of the testator.
Managed by a trustee: The trustee is responsible for managing the trust assets and distributing them to the beneficiaries in accordance with the terms of the trust.
Flexibility in distributions: The terms of the trust can specify how and when the trust assets are to be distributed to the beneficiaries. For example, the trust could provide for distributions to be made at specific ages, upon the occurrence of certain events, or at the trustee's discretion.
Tax benefits: Testamentary trusts can offer some tax benefits, such as reducing the amount of estate duty that is payable on the testator's estate.
Here are some of the common reasons why people in Hong Kong might use testamentary trusts:
To protect assets from creditors: Assets that are held in a trust are generally protected from the creditors of the beneficiaries.
To control the distribution of assets: The terms of the trust can specify how and when the trust assets are to be distributed to the beneficiaries. This can be helpful if the testator is concerned about the beneficiaries' ability to manage money responsibly.
To reduce tax liabilities: Testamentary trusts can offer some tax benefits, such as reducing the amount of estate duty that is payable on the testator's estate.
To provide for specific needs of beneficiaries: The terms of the trust can be tailored to meet the specific needs of the beneficiaries, such as providing for the education or care of a disabled child.
If you are considering using a testamentary trust in your estate plan, it is important to consult with a professional to ensure that the trust is drafted correctly and meets your specific needs.
How Bestar Trusty can Help
Ways Bestar Trusty Could Help:
Acting as Trustee: As a trust company, Bestar Trusty could act as the trustee of your testamentary trust. This means we would be responsible for managing the trust assets according to your wishes outlined in the trust document, including:
Investing the assets
Distributing income and principal to beneficiaries as specified
Handling administrative tasks like tax filings and recordkeeping
Providing financial reporting to beneficiaries
Setting Up the Trust: Bestar Trusty might offer assistance in setting up your testamentary trust, which could involve:
Drafting the trust document in accordance with Hong Kong law and your wishes
Identifying and appointing suitable trustees (if you don't choose Bestar Trusty)
Transferring assets to the trust
Estate Planning Advice: We offer general estate planning advice.
Consult Bestar Trusty to ensure your testamentary trust is created and managed correctly according to your wishes and complies with local laws.
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