Understanding Testamentary Trusts
Testamentary Trusts are powerful estate planning tools that deliver substantial tax savings and robust asset protection for your beneficiaries. This guide explores the key advantages of incorporating a Testamentary Trust into your estate plan and demonstrates how this strategy can preserve and grow your family's wealth for generations to come.
A will is a legal document that allows you to control what happens to your assets after you pass away. As the testator (the person making the will), you can specify how your estate should be distributed among your chosen beneficiaries. Beyond asset distribution, your will also names the executor—the person or people you trust to carry out your wishes and handle the administration of your estate.
What is a Testamentary Trust?
A Testamentary Trust is a sophisticated estate planning tool that operates through your will. Unlike a standard will that distributes assets directly to beneficiaries, a Testamentary Trust holds some or all of your assets in a trust structure after your death. This structure provides ongoing protection and management of your wealth for the people you care about most, your beneficiaries.
How does a Testamentary Trust Work?
When you pass away, the Testamentary Trust automatically comes into effect as outlined in your will. Rather than receiving assets outright, your beneficiaries become entitled to distributions from the trust. The trustee you've appointed in your will takes on the responsibility of managing the trust assets and making distributions according to your instructions and the beneficiaries' needs.
Significant Tax Advantages
One of the most compelling reasons to consider a Testamentary Trust is the substantial tax savings it can deliver for your beneficiaries. These benefits are particularly valuable when your beneficiaries either earn high incomes or include children under 18 years of age.
How the Tax Benefits Work
Under Section 102AG of the Income Tax Assessment Act 1936, income distributed from a Testamentary Trust qualifies as "excepted income." This special classification allows your beneficiaries to access the tax-free threshold on trust distributions—a significant advantage not available with standard discretionary trusts, where distributions to minors above $641 are typically taxed at penalty rates equivalent to the top marginal tax rate.
Key Benefits of Testamentary Trusts
- Asset Protection - Trust assets are generally protected from beneficiaries' creditors, relationship breakdowns, and poor financial decisions.
- Flexibility - Trustees can adapt distributions based on beneficiaries' changing circumstances, such as education needs, health issues, or life stages.
- Tax Efficiency - Testamentary Trusts can provide significant tax advantages, including income splitting opportunities and concessional tax rates for minor beneficiaries.
- Control from Beyond - You maintain control over how and when your assets benefit your loved ones, even after your death.
Is a Testamentary Trust Right for You?
Testamentary Trusts are particularly valuable for families with:
- Young children or grandchildren
- Beneficiaries with disabilities
- Complex family structures
- Significant assets requiring ongoing management
- Concerns about beneficiaries' financial responsibility
Who Benefits Most from These Tax Advantages?
- High-Income Beneficiaries - Trust distributions can be allocated to lower-income family members, reducing the overall tax burden.
- Families with Minor Children - Children can receive distributions using their full tax-free threshold, rather than facing penalty tax rates.
- Multi-Generational Wealth Transfer - Income can be distributed strategically across family members to optimise tax outcomes year after year.
- Long-Term Financial Impact - These tax savings compound over time, potentially saving your family tens of thousands of dollars annually while preserving more of your wealth for future generations.
For personalised advice on whether a Testamentary Trust suits your circumstances and to explore the specific tax benefits for your family, speak with our experienced estate planning team.
Contact Us Now!
For comprehensive legal services,
book now for your free initial consultation.
Contact Us
Thank you for contacting us.
We will get back to you as soon as possible.
We will get back to you as soon as possible.
Oops, there was an error sending your message.
Please try again later.
Please try again later.
Contact Us Now!
For comprehensive legal services,
book now for your free initial consultation.
Contact Us
Thank you for contacting us.
We will get back to you as soon as possible.
We will get back to you as soon as possible.
Oops, there was an error sending your message.
Please try again later.
Please try again later.
Our Latest Story
By Nik Vinsek
•
26 May 2026
So you have a debtor owing funds that have remained outstanding for months, and they have now gone completely silent. Engaging CJM Lawyers may be the next step in the right direction towards recovering your funds. Step 1: Final Demand Engaging a solicitor to issue a final letter of demand can sometimes be the first and last step in debt recovery. A solicitor will review the dispute, assess the strength of your claim, and issue a formal demand on your behalf through multiple channels, placing the debtor on clear notice of the seriousness of the matter. At this stage, most debtors will either pay the outstanding amount or re-engage in communication. When a debtor remains unresponsive, this can be frustrating; however, it is often simply the beginning of a structured recovery process. Step 2: Commence Proceedings Depending on the amount of the debt, commencing legal proceedings may be the next appropriate step where a debtor becomes unresponsive. We will help you assess the commercial viability of commencing proceedings based on a variety of factors including: debt amount; debtor responsiveness; the debtor’s assets and location; and timeframe for recovery. To commence proceedings, your solicitor will prepare a Claim and Statement of Claim and file these documents in the relevant Court. The complexity of the matter, as well as the supporting evidence available, will influence the framing of the claim, ranging from straightforward breaches of contract to more complex causes of action. The costs of commencing proceedings should always be considered and discussed with your solicitor to ensure the recovery action remains commercially viable. Once filed, the documents must be served on the debtor: for a company, service is typically affected by posting to its registered office; for an individual, a process server is engaged to affect personal service. Step 3: Default Judgment Once served, the debtor has 28 days in the Queensland courts to file and serve a Notice of Intention to Defend. In cases involving a silent debtor, no response is often received. After the 28-day period expires, your solicitor can apply for default judgment without the need for a court hearing. Once judgment is entered, you have six years to enforce the judgment debt. Step 4: Enforcement There are various avenues available to enforce judgment debt. If the debtor’s financial position is unknown, a Statement of Financial Position may be served, requiring them to disclose relevant financial information and documentation to assist in determining the most appropriate enforcement pathway. If they fail to comply, an enforcement hearing may be listed, at which the debtor’s attendance is compulsory. Failure to attend can result in serious consequences, including a warrant for arrest to attend the hearing. Where the debtor’s financial position is known, enforcement may proceed through several mechanisms, including bankruptcy proceedings, warrants for seizure and sale of property, redirection of debts, or garnishee orders against earnings or bank accounts. Your solicitor will assist in determining the most effective enforcement strategy based on the circumstances. Conclusion If your debtor has gone silent, it is not the end of the road for recovery. Seeking legal advice can help you assess the most appropriate recovery pathway, weighing up cost, risk, and commercial viability. It is always important to remember that litigation is inherently volatile and engaging a solicitor will help you assess the costs and benefits of this recovery route. Speak to our Litigation and Disputes Team at CJM Lawyers today, and we will work with you to determine the most effective course of action to recover your funds.
By May 2026 Edition
•
26 May 2026
If you have a Will that includes a testamentary trust (or if you've been thinking about adding one) you may have seen some concerning headlines following the recent Federal Budget. Here's what you actually need to know. Do You Have Anything To Worry About Right Now? The Government has announced a policy intention, not a law. No legislation has been drafted, and what's finally passed by Parliament may look quite different to what's been announced. Should You Hold Off Setting Up A Testamentary Trust? If you already have a will with a testamentary trust, you're in a good position. No action needed right now. If you've been meaning to update your will or add a testamentary trust, this is a good prompt to get it done. Come and speak with us so we can structure it in the most effective way given the current landscape. If you're looking to set up a new discretionary testamentary trust, contact us before proceeding. We can make sure you're across your options and structured appropriately. Should You Come In For A Review Right Now? Not urgently - but if your will is overdue for a review anyway, now is a sensible time. We can make sure your documents are in good shape and flag anything worth keeping an eye on. What Should You Do In The Meantime? No action is required at this stage. We are closely monitoring the legislative process and will issue updates as things develop. In the meantime, we'd also encourage you to have a conversation with your accountant or financial adviser, as these changes touch on both legal and tax planning, and a combined approach will serve you best. If It Does Pass – What Does It Mean? A minimum 30% tax would apply to income distributed from new discretionary testamentary trusts established after the legislation takes effect (May 12, 2026). Fixed testamentary trusts are excluded from the proposed changes. If and when legislation is passed, we'll be in touch to walk you through what it means for your specific situation and what your options are. Why Might It Not Pass Its Current Form? Because right now it's a proposal, not a law. The legislation still needs to be drafted, introduced to Parliament, debated, and go through a consultation process where industry and the public can have their say. This process commonly results in significant amendments, and sometimes measures don't proceed at all. We'll keep you informed every step of the way. Have questions in the meantime? We're happy to help. Call us on 1300 245 299 or reply directly to this email. This communication is intended as general information only and does not constitute legal or tax advice. Your personal circumstances will determine how any changes may affect you, and we recommend seeking advice from both your solicitor and a registered tax agent before taking any action.
By Coco Zu
•
15 April 2026
Thinking of employing a skilled worker, or working for someone with your skills, but do not currently hold a visa to work in Australia? An Employer-Sponsored Visa may help resolve this dilemma. The Employer-Sponsored Visa program allows Australian employers to nominate overseas workers for positions that cannot easily be filled by local employees. For many migrants, an employer-sponsored visa provides a pathway to long-term employment and, in some cases, permanent residency. However, navigating the requirements, obligations, and eligibility criteria of these visas can be complex for both employers and applicants. We are able to help you through the whole journey from sponsorship to visa application. The Employer-Sponsored Visa program includes three main visa subclasses: subclass 482, subclass 494, and subclass 186. Each visa subclass has different requirements in relation to the nominated occupation, employment location, the applicant’s work experience and English skills. Given the frequent updates to policies and requirements, navigating this visa pathway can become complex and overwhelming. If you are considering whether any of the visa subclasses are suitable for your circumstances, now is the time to seek the right guidance. Our experienced solicitors in our Immigration team are ready to assist you at every stage, from initial eligibility assessment through to application and compliance, ensuring a smooth, efficient process while minimising risk and stress. Book an initial consultation with Coco Zu to discuss your situation, explore your options, and settle on a strategic plan tailored to your needs. With the right legal support and guidance from the start, CJM Lawyers can make all the difference to your future in Australia. Contact our office on 1300 245 299 or email info@cjmlaw.com.au to get started now!
Our Latest Story
By Nik Vinsek
•
26 May 2026
So you have a debtor owing funds that have remained outstanding for months, and they have now gone completely silent. Engaging CJM Lawyers may be the next step in the right direction towards recovering your funds. Step 1: Final Demand Engaging a solicitor to issue a final letter of demand can sometimes be the first and last step in debt recovery. A solicitor will review the dispute, assess the strength of your claim, and issue a formal demand on your behalf through multiple channels, placing the debtor on clear notice of the seriousness of the matter. At this stage, most debtors will either pay the outstanding amount or re-engage in communication. When a debtor remains unresponsive, this can be frustrating; however, it is often simply the beginning of a structured recovery process. Step 2: Commence Proceedings Depending on the amount of the debt, commencing legal proceedings may be the next appropriate step where a debtor becomes unresponsive. We will help you assess the commercial viability of commencing proceedings based on a variety of factors including: debt amount; debtor responsiveness; the debtor’s assets and location; and timeframe for recovery. To commence proceedings, your solicitor will prepare a Claim and Statement of Claim and file these documents in the relevant Court. The complexity of the matter, as well as the supporting evidence available, will influence the framing of the claim, ranging from straightforward breaches of contract to more complex causes of action. The costs of commencing proceedings should always be considered and discussed with your solicitor to ensure the recovery action remains commercially viable. Once filed, the documents must be served on the debtor: for a company, service is typically affected by posting to its registered office; for an individual, a process server is engaged to affect personal service. Step 3: Default Judgment Once served, the debtor has 28 days in the Queensland courts to file and serve a Notice of Intention to Defend. In cases involving a silent debtor, no response is often received. After the 28-day period expires, your solicitor can apply for default judgment without the need for a court hearing. Once judgment is entered, you have six years to enforce the judgment debt. Step 4: Enforcement There are various avenues available to enforce judgment debt. If the debtor’s financial position is unknown, a Statement of Financial Position may be served, requiring them to disclose relevant financial information and documentation to assist in determining the most appropriate enforcement pathway. If they fail to comply, an enforcement hearing may be listed, at which the debtor’s attendance is compulsory. Failure to attend can result in serious consequences, including a warrant for arrest to attend the hearing. Where the debtor’s financial position is known, enforcement may proceed through several mechanisms, including bankruptcy proceedings, warrants for seizure and sale of property, redirection of debts, or garnishee orders against earnings or bank accounts. Your solicitor will assist in determining the most effective enforcement strategy based on the circumstances. Conclusion If your debtor has gone silent, it is not the end of the road for recovery. Seeking legal advice can help you assess the most appropriate recovery pathway, weighing up cost, risk, and commercial viability. It is always important to remember that litigation is inherently volatile and engaging a solicitor will help you assess the costs and benefits of this recovery route. Speak to our Litigation and Disputes Team at CJM Lawyers today, and we will work with you to determine the most effective course of action to recover your funds.
By May 2026 Edition
•
26 May 2026
If you have a Will that includes a testamentary trust (or if you've been thinking about adding one) you may have seen some concerning headlines following the recent Federal Budget. Here's what you actually need to know. Do You Have Anything To Worry About Right Now? The Government has announced a policy intention, not a law. No legislation has been drafted, and what's finally passed by Parliament may look quite different to what's been announced. Should You Hold Off Setting Up A Testamentary Trust? If you already have a will with a testamentary trust, you're in a good position. No action needed right now. If you've been meaning to update your will or add a testamentary trust, this is a good prompt to get it done. Come and speak with us so we can structure it in the most effective way given the current landscape. If you're looking to set up a new discretionary testamentary trust, contact us before proceeding. We can make sure you're across your options and structured appropriately. Should You Come In For A Review Right Now? Not urgently - but if your will is overdue for a review anyway, now is a sensible time. We can make sure your documents are in good shape and flag anything worth keeping an eye on. What Should You Do In The Meantime? No action is required at this stage. We are closely monitoring the legislative process and will issue updates as things develop. In the meantime, we'd also encourage you to have a conversation with your accountant or financial adviser, as these changes touch on both legal and tax planning, and a combined approach will serve you best. If It Does Pass – What Does It Mean? A minimum 30% tax would apply to income distributed from new discretionary testamentary trusts established after the legislation takes effect (May 12, 2026). Fixed testamentary trusts are excluded from the proposed changes. If and when legislation is passed, we'll be in touch to walk you through what it means for your specific situation and what your options are. Why Might It Not Pass Its Current Form? Because right now it's a proposal, not a law. The legislation still needs to be drafted, introduced to Parliament, debated, and go through a consultation process where industry and the public can have their say. This process commonly results in significant amendments, and sometimes measures don't proceed at all. We'll keep you informed every step of the way. Have questions in the meantime? We're happy to help. Call us on 1300 245 299 or reply directly to this email. This communication is intended as general information only and does not constitute legal or tax advice. Your personal circumstances will determine how any changes may affect you, and we recommend seeking advice from both your solicitor and a registered tax agent before taking any action.
By Coco Zu
•
15 April 2026
Thinking of employing a skilled worker, or working for someone with your skills, but do not currently hold a visa to work in Australia? An Employer-Sponsored Visa may help resolve this dilemma. The Employer-Sponsored Visa program allows Australian employers to nominate overseas workers for positions that cannot easily be filled by local employees. For many migrants, an employer-sponsored visa provides a pathway to long-term employment and, in some cases, permanent residency. However, navigating the requirements, obligations, and eligibility criteria of these visas can be complex for both employers and applicants. We are able to help you through the whole journey from sponsorship to visa application. The Employer-Sponsored Visa program includes three main visa subclasses: subclass 482, subclass 494, and subclass 186. Each visa subclass has different requirements in relation to the nominated occupation, employment location, the applicant’s work experience and English skills. Given the frequent updates to policies and requirements, navigating this visa pathway can become complex and overwhelming. If you are considering whether any of the visa subclasses are suitable for your circumstances, now is the time to seek the right guidance. Our experienced solicitors in our Immigration team are ready to assist you at every stage, from initial eligibility assessment through to application and compliance, ensuring a smooth, efficient process while minimising risk and stress. Book an initial consultation with Coco Zu to discuss your situation, explore your options, and settle on a strategic plan tailored to your needs. With the right legal support and guidance from the start, CJM Lawyers can make all the difference to your future in Australia. Contact our office on 1300 245 299 or email info@cjmlaw.com.au to get started now!
Our Latest Story
By Nik Vinsek
•
26 May 2026
So you have a debtor owing funds that have remained outstanding for months, and they have now gone completely silent. Engaging CJM Lawyers may be the next step in the right direction towards recovering your funds. Step 1: Final Demand Engaging a solicitor to issue a final letter of demand can sometimes be the first and last step in debt recovery. A solicitor will review the dispute, assess the strength of your claim, and issue a formal demand on your behalf through multiple channels, placing the debtor on clear notice of the seriousness of the matter. At this stage, most debtors will either pay the outstanding amount or re-engage in communication. When a debtor remains unresponsive, this can be frustrating; however, it is often simply the beginning of a structured recovery process. Step 2: Commence Proceedings Depending on the amount of the debt, commencing legal proceedings may be the next appropriate step where a debtor becomes unresponsive. We will help you assess the commercial viability of commencing proceedings based on a variety of factors including: debt amount; debtor responsiveness; the debtor’s assets and location; and timeframe for recovery. To commence proceedings, your solicitor will prepare a Claim and Statement of Claim and file these documents in the relevant Court. The complexity of the matter, as well as the supporting evidence available, will influence the framing of the claim, ranging from straightforward breaches of contract to more complex causes of action. The costs of commencing proceedings should always be considered and discussed with your solicitor to ensure the recovery action remains commercially viable. Once filed, the documents must be served on the debtor: for a company, service is typically affected by posting to its registered office; for an individual, a process server is engaged to affect personal service. Step 3: Default Judgment Once served, the debtor has 28 days in the Queensland courts to file and serve a Notice of Intention to Defend. In cases involving a silent debtor, no response is often received. After the 28-day period expires, your solicitor can apply for default judgment without the need for a court hearing. Once judgment is entered, you have six years to enforce the judgment debt. Step 4: Enforcement There are various avenues available to enforce judgment debt. If the debtor’s financial position is unknown, a Statement of Financial Position may be served, requiring them to disclose relevant financial information and documentation to assist in determining the most appropriate enforcement pathway. If they fail to comply, an enforcement hearing may be listed, at which the debtor’s attendance is compulsory. Failure to attend can result in serious consequences, including a warrant for arrest to attend the hearing. Where the debtor’s financial position is known, enforcement may proceed through several mechanisms, including bankruptcy proceedings, warrants for seizure and sale of property, redirection of debts, or garnishee orders against earnings or bank accounts. Your solicitor will assist in determining the most effective enforcement strategy based on the circumstances. Conclusion If your debtor has gone silent, it is not the end of the road for recovery. Seeking legal advice can help you assess the most appropriate recovery pathway, weighing up cost, risk, and commercial viability. It is always important to remember that litigation is inherently volatile and engaging a solicitor will help you assess the costs and benefits of this recovery route. Speak to our Litigation and Disputes Team at CJM Lawyers today, and we will work with you to determine the most effective course of action to recover your funds.
By May 2026 Edition
•
26 May 2026
If you have a Will that includes a testamentary trust (or if you've been thinking about adding one) you may have seen some concerning headlines following the recent Federal Budget. Here's what you actually need to know. Do You Have Anything To Worry About Right Now? The Government has announced a policy intention, not a law. No legislation has been drafted, and what's finally passed by Parliament may look quite different to what's been announced. Should You Hold Off Setting Up A Testamentary Trust? If you already have a will with a testamentary trust, you're in a good position. No action needed right now. If you've been meaning to update your will or add a testamentary trust, this is a good prompt to get it done. Come and speak with us so we can structure it in the most effective way given the current landscape. If you're looking to set up a new discretionary testamentary trust, contact us before proceeding. We can make sure you're across your options and structured appropriately. Should You Come In For A Review Right Now? Not urgently - but if your will is overdue for a review anyway, now is a sensible time. We can make sure your documents are in good shape and flag anything worth keeping an eye on. What Should You Do In The Meantime? No action is required at this stage. We are closely monitoring the legislative process and will issue updates as things develop. In the meantime, we'd also encourage you to have a conversation with your accountant or financial adviser, as these changes touch on both legal and tax planning, and a combined approach will serve you best. If It Does Pass – What Does It Mean? A minimum 30% tax would apply to income distributed from new discretionary testamentary trusts established after the legislation takes effect (May 12, 2026). Fixed testamentary trusts are excluded from the proposed changes. If and when legislation is passed, we'll be in touch to walk you through what it means for your specific situation and what your options are. Why Might It Not Pass Its Current Form? Because right now it's a proposal, not a law. The legislation still needs to be drafted, introduced to Parliament, debated, and go through a consultation process where industry and the public can have their say. This process commonly results in significant amendments, and sometimes measures don't proceed at all. We'll keep you informed every step of the way. Have questions in the meantime? We're happy to help. Call us on 1300 245 299 or reply directly to this email. This communication is intended as general information only and does not constitute legal or tax advice. Your personal circumstances will determine how any changes may affect you, and we recommend seeking advice from both your solicitor and a registered tax agent before taking any action.
By Coco Zu
•
15 April 2026
Thinking of employing a skilled worker, or working for someone with your skills, but do not currently hold a visa to work in Australia? An Employer-Sponsored Visa may help resolve this dilemma. The Employer-Sponsored Visa program allows Australian employers to nominate overseas workers for positions that cannot easily be filled by local employees. For many migrants, an employer-sponsored visa provides a pathway to long-term employment and, in some cases, permanent residency. However, navigating the requirements, obligations, and eligibility criteria of these visas can be complex for both employers and applicants. We are able to help you through the whole journey from sponsorship to visa application. The Employer-Sponsored Visa program includes three main visa subclasses: subclass 482, subclass 494, and subclass 186. Each visa subclass has different requirements in relation to the nominated occupation, employment location, the applicant’s work experience and English skills. Given the frequent updates to policies and requirements, navigating this visa pathway can become complex and overwhelming. If you are considering whether any of the visa subclasses are suitable for your circumstances, now is the time to seek the right guidance. Our experienced solicitors in our Immigration team are ready to assist you at every stage, from initial eligibility assessment through to application and compliance, ensuring a smooth, efficient process while minimising risk and stress. Book an initial consultation with Coco Zu to discuss your situation, explore your options, and settle on a strategic plan tailored to your needs. With the right legal support and guidance from the start, CJM Lawyers can make all the difference to your future in Australia. Contact our office on 1300 245 299 or email info@cjmlaw.com.au to get started now!
Our Client Say
Our Client Say
Our Client Say
