A testamentary trust is a trust created by a will that comes into effect on death. In Queensland, it is often used to manage how beneficiaries receive an inheritance and to provide long-term safeguards. It can be particularly useful where beneficiaries are minors, have impaired decision-making capacity, face bankruptcy risk, or are in unstable relationships.

Th core design questions are: who is the trustee, who can benefit, and what discretion exists over distributions. A well-drafted trust can allow the trustee to pay expenses (education, health, housing) or make controlled distributions over time, rather than transferring a lump sum outright. This can reduce the risk of dissipation and improve intergenerational outcomes.

Tax and compliance issues should be considered. Testamentary trusts may access concessional tax treatment for certain minors receiving income from the trust, but benefits depend on correct structuring and administration. Trustee powers should address investment, sale of property, and the ability to retain assets(for example, a family home) where appropriate.

A testamentary trust is not suitable for every estate. It adds complexity and ongoing administration, and it must align with the estate’s asset mix—particularly where key assets sit outside the estate(superannuation, jointly held assets, family trusts). Where appropriate, however, it can be a high-leverage tool to protect beneficiaries and preserve family wealth.