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The life estate and testamentary discretionary trust in modern wills


An important early step in structuring an estate plan is to decide who is to benefit from each of the assets and to what extent. Next, it is necessary to consider the form of ownership and control of the assets.

The introduction of the capital gains tax, and the uncertainty of the tax treatment of life estates under those provisions, together with changing attitudes to the methods of control and forms of ownership of assets, has led to a shift in estate planning away from the use of life interests or testamentary trusts with specific equitable life and reversionary interests. This article examines some of the issues to be considered by an estate planner when considering the use of life estates and whether life estates still have a role in the modern will.

The article then considers some general issues relating to testamentary trusts.

Author profiles

Kevin Munro CTA
Kevin is a Solicitor and Principal of Munro Lawyers, a specialist legal practice in Sydney. He has 37 years experience in tax and superannuation, forming his own firm in 1994. Kevin’s main areas of practice are tax planning, superannuation and estate planning, and he regularly acts as a consultant for other professional firms. Kevin is active in professional education and gives lectures and workshops for various professional organisations. He is a member of the New South Wales Law Society’s Advisory Committee for Small Business Accreditation. - Current at 11 January 2017
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Emma Munro
Emma Munro is a Senior Lawyer at Munro Lawyers. - Current at 03 September 2012
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