What it means
A testamentary trust is a trust established under a will that comes into effect after death. Instead of giving assets to beneficiaries outright, the will directs that they be held by a trustee for the benefit of others, which can provide asset protection, tax flexibility, and protection for vulnerable or young beneficiaries. Testamentary trusts are recognised across Australia and can offer income-tax advantages for minor beneficiaries. They are commonly used in estate planning for families and blended families.
How it's used
Their will set up a testamentary trust so their young children's inheritance would be managed by a trustee until they turned 25.