A testamentary trust is administered by a trustee, who is nominated in the Will document. The trustee is responsible for the investment and distribution of assets of the trust in the best interests of the beneficiary. The trustee must look after these assets until the trust comes to an end.
A trustee may distribute parts of the capital and/or income to beneficiary or beneficiaries at their discretion in any one year. A testamentary trust provides the trustee with the flexibility to control when and how much individual beneficiaries receive their inheritance.
All assets (money and investments) held within a trust are referred to as the trust fund. The trust fund may produce income through interest or dividends. Capital assets in the trust fund may grow in value over time, resulting in capital gains which can be deferred by being held by the trustee of the trust and not distributed to the beneficiaries.