A testamentary trust can be validly established for up to 80 years, and as such can benefit two to three generations, with the distribution of the trust’s income and assets being completely flexible. The penalty rates imposed upon unearned income distributed from family discretionary trusts to minor children therefore do not apply to such distributions from a testamentary … Testamentary Trust Wills can help your beneficiaries to minimise tax and protect their inheritance. The Government has extended a specific anti-avoidance rule that applies to closely held trusts engaging in circular trust … Testamentary Trusts and Minors. Answered: I'm completing a tax return for a testamentary trust. Ask questions, share your knowledge and discuss your experiences with us and our Community. Furthermore, and similar to income of the testamentary trust… Testamentary trust wills are typically long and complex documents. Administrative concession of ATO in PS LA 2003/12 does not apply to s118-195 ITAA 1997 ut treating the phrase ‘trustee of a deceased estate’ in s118-195 ITAA 1997 has been seen to relate to testamentary trusts –ATOID 2006/34 and 2004/882. Eligible income is subject to higher tax rates, plus the Medicare levy in the hands of both … And then there is the issue of capacity. Answered: I'm completing a tax return for a testamentary trust. First, given that a testamentary discretionary trust is usually being considered in an estate planning context, it is not such an easy decision to automatically exclude foreign persons as potential beneficiaries. Trust Distributions. Unlike living trusts or inter-vivos trusts, a testamentary trust will only go into effect upon your death. It's neither a deceased estate, nor an inter-vivos trust. In our March update, we referred to the uncertainty about the ongoing application of PSLA 2003/12 relating to the issue of whether trustees of testamentary trusts are like executors of estates for the purpose of CGT. A key concern when implementing a testamentary trust solution is to ensure the will maker has mental capacity to enter into such complicated document. ato Go to ato.gov.au ... Income of the trust estate to which a minor beneficiary, who is a prescribed person, is presently entitled, is eligible income except to the extent that the income can be classified as excepted income for the beneficiary. All the careful tax planning and will drafting may fly out the window, if the will is challenged on the basis that … The new measure will clarify that minors will be taxed at adult marginal tax rates only in respect of income a testamentary trust generates from … Not assessed until the beneficiary disposes of the asset go into effect upon your death executor. 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