A testamentary trust is a trust that is to contain a portion or all of a decedent's assets outlined within a person's last will and testament. A testamentary trust is not established until after the person passes away in which the executor or executrix settles the estate as outlined in the will.

Who owns the assets in a testamentary trust?

The significant advantage of a testamentary trust is that the assets are owned by one person(s), the trustee, and the benefit of the income and capital of the trust passes to another person/s, the beneficiaries.

Who pays tax on a testamentary trust?

Generally speaking, provided there is a beneficiary who is “present entitled” to the net income of a trust under s 97 of the ITAA 1936, it is the beneficiary who pays the tax, not the trustee.