Why Your Will Might Be Too Simple

Many high-income Australians think a standard will is enough. But what they don’t realise is this: A simple will could cost your children tens of thousands more in tax, and offer no protection if their marriage breaks down, or if they face financial trouble.

That’s where a testamentary trust comes in.

What Is a Testamentary Trust?

A testamentary trust is a trust that only comes into effect after you pass away. It’s built into your will, and holds the assets you leave behind — such as property, shares, or cash — for the benefit of your nominated beneficiaries (usually your spouse or children).

Key difference from a “simple will”?
A simple will gives assets directly. A testamentary trust holds them in a legal wrapper that offers control, flexibility, and protection.

Why Smart Families Use It

Tax Benefits
Beneficiaries (especially children and grandchildren) can be distributed income in a more tax-efficient way. In some cases, they receive the same tax-free thresholds as adults — even if they’re minors.

Divorce & Asset Protection
If your child’s relationship breaks down, assets in a testamentary trust are harder for ex-partners to claim. Similarly, creditors can’t easily access them.

Future Flexibility
Instead of giving your children a lump sum, they can access assets over time — through the trustee’s control — helping avoid bad decisions or pressure.

Case Study

Emma and James own three investment properties, two in their own names and one inside a family trust. They have two teenage kids.

Instead of leaving everything directly to their children, they update their will to include testamentary trusts. This means: Assets are protected if the kids’ future partners divorce them. Their children can receive income with reduced tax. They can appoint someone they trust to manage distributions until the kids are mature

FAQ

Q: Can I set this up now?
A: Testamentary trusts are written into your will. They don’t “activate” until your death.

Q: Who controls the trust after I’m gone?
A: You choose the trustee(s) — this can be your spouse, adult child, or a professional advisor.

Q: Will it delay probate or add cost?
A: Not significantly. It adds some complexity, but usually much less than what’s saved in tax and disputes.

Q: Can my children access the money?
A: Yes — depending on how the trustee manages it. You can set flexible or firm rules in your will.

(Note: This article provides general information only and does not constitute legal advice. You should seek advice from a qualified professional before acting on any of the information contained herein.)

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