Testamentary trust: 


It is separate trust to the Deceased Estate

Deceased estate


Established under the terms of a valid will, Trustee is nominated in a will to manage the trust

Whereas A deceased estate is treated as a trust for tax purposes with you as the executor taken to be its trustee

As opposed to the income from the trust being distributed solely to your nominated beneficiary,

  • the trust allows the income to be distributed to a wider class of beneficiaries such as your nominated beneficiaries’ children or grandchildren.

Not commence until you die


Tax advantage (different from discretionary family trust)


The beneficiaries pay income tax at marginal tax rates

  • Unlike tax on income from a family trust, beneficiaries under 18 are taxed at normal adulate rates rather than at penalty rates for minor. Link 1 link 2  Link 3  Link 4 
  • And minor is still eligible for low income tax offset to reduce tax payable on excepted income such as income from a deceased person's estate

Functions like discretionary family trust


  • Protection of the assets: legally separates the inherited assets from beneficiaries' personal assets, especially from legal proceedings arising from marriage or relationship breakdown.


ato link https://www.ato.gov.au/forms/trust-tax-return-instructions-2017/?page=42