T a x m a n p a y s f o r
e d u c a t i o n
Save thousands of dollars on private
education with savvy estate planning
You can take advantage of legal tax benefits
and save on education costs with a trust. That
statement comes from O’Keefe Mahoney
Bennett estate planning manager Richard
Dawson who says trusts are established in a will
and funded by assets of a deceased estate or
payments to an estate.
“A Testamentary Discretionary Trust (TDT)
is otherwise known a lineal descendants trust,”
he says. “The trust is controlled by a trustee.
The trustee is usually the primary beneficiary
and able to enjoy the benefits of the trust. TDTs
often include other beneficiaries. These may be
the children and grandchildren of the primary
beneficiary because current tax legislation
allows the proceeds of a trust to be distributed to
The benefit of correct estate planning is that tax
savings result when the trustee distributes gains
to the beneficiaries with the lowest marginal tax
rate in a particular financial year. “These may
be the mother, father, child, or grandchild of the
deceased which means that the beneficiaries pay
tax on trust proceeds at normal marginal tax rates.
“These beneficiaries are usually children
as they are unlikely to be earning an income.
Therefore significant tax savings can be gained
by distributing trust income to children because
children aged under 18 years are taxed at
marginal adult rates as opposed to adults on
high incomes who pay significantly higher tax
rates,” Richard says. “Those tax savings from the
trust income can therefore be used to subsidise
children’s education costs and living expenses.
By effective use of estate planning, we can
ensure that those savings via the taxman can pay
for their education and lifestyle.”
For more information on tax effective estate
planning contact O’Keefe Mahoney Bennett
Solicitors, (07) 5555 0000.
Richard Dawson | OMB Solicitors
102 | Pindara Magazine ISSUE 12 | 2018