Cascading Testamentary Trusts

What is a Cascading Testamentary Trust? 

 

Cascading Testamentary Discretionary Trusts (TDTs) refer to an estate planning structure whereby the assets of one TDT are transferred (or ‘cascade’) into one or more TDTs on the happening of a specific event.

For example, say TDT1 is established for the benefit of the surviving spouse and any children.

The terms of TDT1 could provide that when the surviving spouse dies, or on an earlier date nominated by the surviving spouse, the capital of TDT1 is to be distributed equally into TDT2 and TDT3.

TDT2 and TDT3, for instance could be established for the benefit of the original testator’s two children and their respective families.

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