Wills and testamentary trusts

    What is a testamentary trust will, and is it right for your family?

    A testamentary trust will is a will that creates one or more trusts on your death, instead of leaving assets to your beneficiaries outright. The inheritance flows into a trust each beneficiary ordinarily controls but does not personally own. That single feature delivers two things an ordinary will cannot: it protects the inheritance from risks such as divorce, bankruptcy and creditors, and it lets income be shared across the family in a far more tax-effective way. We prepare them for families in Sydney, Melbourne and across Australia.

    What a testamentary trust will actually does

    An ordinary will leaves assets to your beneficiaries outright, in their own names. A testamentary trust will instead directs each inheritance into a trust created by the will. Your beneficiary usually controls their trust and can use and invest the money freely. Because they do not own it outright, it is held at one remove from their personal risks. The structure only comes into existence on your death, so nothing changes for you during your lifetime.

    The three reasons families use them

    The first is asset protection. An inheritance held in a testamentary trust is far harder for a former partner, a creditor or a trustee in bankruptcy to reach than one held in a beneficiary's own name. The second is tax. A testamentary trust can distribute income to children and grandchildren at ordinary adult tax rates rather than the penalty rates that normally apply to minors, which can save tax every year the trust operates. The third is control and protection for beneficiaries who need it, such as a young beneficiary, or one who is vulnerable or cannot manage money.

    Who a testamentary trust will suits

    They suit families who have built something worth protecting and who care about where it ends up: parents who want a child's inheritance shielded from a possible divorce, families with young children or grandchildren, blended families, business owners, and anyone leaving significant superannuation. They are not only for the very wealthy. The benefit is about protection and tax, not just the size of the estate.

    What makes a good one

    A testamentary trust is only as strong as its drafting. Who controls each trust, and who controls it next. How income and capital can be distributed and streamed. How it is taxed. What happens if a beneficiary is vulnerable, and what happens across generations. A template will that mentions a testamentary trust is not the same as one drafted deliberately around your family. The difference shows up years later, at exactly the moment it matters.

    How we work

    Every client works directly with Rachael, not a team you never meet. Engagements are fixed-fee and agreed at the outset, so there are no hourly surprises. We start with a conversation about your family and what you want to protect, design the structure around that, and draft every document in plain language you and your family can actually read. We have offices at 39 Martin Place, Sydney and 55 Collins Street, Melbourne, and advise families across Australia in person and by video.

    What to do next

    If you want to know whether a testamentary trust will is right for your family, and what it would involve, that is a short introductory conversation. There is nothing to prepare.

    Frequently asked questions

    This page is general information only and does not take account of your personal circumstances. It is not legal, tax or financial advice, and you should obtain advice specific to your situation before acting.