Future-Proofing Your Inheritance: How a Testamentary Trust Can Protect Your Loved Ones

15 May

Most people know that a Will is a vital part of planning for the future. It sets out how you want your assets to be distributed when you pass away. But what if you could go a step further — giving your loved ones not just an inheritance, but a protected and well-managed one?

That’s where a testamentary trust comes in.

What is a Testamentary Trust?

A testamentary trust is a trust that’s created by your Will and only comes into effect after your death. Instead of passing assets directly to your beneficiaries, those assets are placed into a trust. A person you nominate — the Trustee — then manages those assets on behalf of your chosen beneficiaries, following the instructions you’ve set out in your Will.

Think of it as a safeguard — a legal structure that wraps your assets in protection and flexibility, even after you’re gone.

Why Consider a Testamentary Trust?

Here are some of the key benefits:

1. Stronger Protection for Your Loved Ones

Assets held in a testamentary trust are generally better protected from:

Legal claims from creditors,
Relationship breakdowns or divorce settlements,
Poor financial decisions by beneficiaries.

This can be particularly valuable if your beneficiaries are vulnerable, have financial difficulties, or are going through a separation.

2. Tax-Effective Planning

Testamentary trusts can provide tax advantages, particularly for families with minor children. Income from the trust can often be distributed in a way that reduces the overall tax burden — with minors potentially taxed at adult rates (rather than the usual penalty rates). Of course, we always recommend speaking to your accountant for tailored tax advice.

3. Peace of Mind with Ongoing Management

If your beneficiaries are young or not in a position to manage a large sum of money, you can appoint a trusted person to manage their inheritance on their behalf — for as long as needed. This ensures your hard-earned assets are used wisely and in line with your values.

4. Flexibility as Life Changes

Life doesn’t stand still, and a well-drafted testamentary trust can give your Trustee the flexibility to respond to changing circumstances. Whether a beneficiary’s needs change or new family members come into the picture, the trust can adapt.

Is a Testamentary Trust Right for You?

Testamentary trusts are especially helpful if:

You have significant assets,
You want to protect your beneficiaries from financial risk,
You’d like to provide tax benefits for your family,
You want to make sure your inheritance is used responsibly.

At Renee Roumanos Legal, we take the time to understand your family, your goals, and what matters most to you. We’ll guide you through the process in a clear and supportive way — no jargon, no overwhelm.

📞 Let’s protect your legacy — and your loved ones.
Call us today on 02 9054 1311 to discuss how a testamentary trust could work for your estate plan.

Plan ahead with confidence. Plan ahead with Renee Roumanos Legal.