What Does a Testamentary Trust Will Actually Cost?
The first question every client asks — and rightly so. A testamentary trust Will is a more complex legal document than a standard Will, and the cost reflects that additional complexity.
Here is what you can expect to pay in Australia:
| Will Type | Typical Cost Range | What's Included |
|---|---|---|
| Simple Will | $600 – $1,200 | Appoints executor, distributes assets outright to beneficiaries, guardianship for minors |
| Testamentary Trust Will (single trust) | $2,000 – $3,500 | Everything above, plus one testamentary trust with defined beneficiaries, trustee provisions, and investment powers |
| Testamentary Trust Will (multiple trusts) | $3,500 – $5,000+ | Multiple trusts (e.g., one per child, one for spouse), more complex distribution provisions, potential superannuation testamentary trust |
| Comprehensive Estate Plan | $4,500 – $8,000+ | Testamentary trust Will, Powers of Attorney, BDBN review, Memorandum of Wishes, SMSF deed review |
The difference between a $600 simple Will and a $3,500 testamentary trust Will is approximately $2,900. That's the real cost of the testamentary trust component — not $3,500. Your Will needs to be drafted regardless; the question is whether the additional investment in trust provisions is justified by the benefits.
The answer, as we'll demonstrate with actual numbers, is almost always yes for estates above $500,000–$750,000.
Worked Example: $1.5M Estate with Two Minor Children
Let's compare the outcomes over 10 years for a $1.5 million estate left to two children (aged 8 and 10 at the time of the Will-maker's death). We'll assume the estate generates a 5% annual return and is managed conservatively.
Scenario A: Simple Will
Assets distributed outright to children at age 18. Until then, managed by the executor/guardian. Investment income is assessed to the minor beneficiaries at penalty tax rates (Division 6AA) — effectively the top marginal rate on amounts above $416/year.
- Annual income: ~$75,000
- Tax on income to minors: ~$30,000+/yr
- No asset protection after age 18
- Setup cost: ~$800
Scenario B: Testamentary Trust Will
Assets held in a testamentary trust. Income distributed to the two minor children at adult marginal rates under the Section 102AG exemption. Each child uses the $18,200 tax-free threshold.
- Annual income: ~$75,000
- Distributed: $37,500 per child
- Tax per child: ~$3,500/yr
- Asset protection maintained
- Setup cost: ~$3,500
The difference: Approximately $230,000 in tax savings over 10 years — from a one-off additional investment of roughly $2,700 (the cost difference between the two Wills). Even after accounting for $10,000–$12,000 in trust accounting fees over the decade, the net benefit is approximately $215,000.
What's the Minimum Estate Size for a Testamentary Trust?
There is no legal minimum — a testamentary trust can be established in a Will regardless of estate size. The question is whether the benefits justify the costs.
Most estate planning practitioners agree on a practical threshold of $500,000–$750,000 as the point where a testamentary trust becomes clearly cost-effective. Here's why that range makes sense:
- Below $500,000: A $500,000 estate generating 5% returns produces $25,000 per year in income. With one minor beneficiary, the annual tax saving from the testamentary trust is approximately $3,000–$5,000. After accounting for the trust's annual accounting costs ($300–$1,200), the net benefit is modest — but still positive if the trust operates for more than a few years
- $500,000–$750,000: The trust clearly begins to pay for itself. Income of $25,000–$37,500 per year generates meaningful tax savings, and the asset protection benefits add further value. For families with minor children, this is typically the threshold where our Principal Lawyer recommends a testamentary trust
- $750,000+: A testamentary trust is almost always recommended. The tax savings alone will significantly exceed the setup and ongoing costs within the first two to three years
The threshold is lower if you have multiple minor beneficiaries (each can use the $18,200 tax-free threshold), asset protection concerns (beneficiaries in vulnerable occupations or relationships), or blended family considerations (where control over distribution timing is important).
For $2M+ Estates: Quantifying the Potential Savings
For high-net-worth families — which represent the majority of WealthShield Legal's clients — the case for a testamentary trust is compelling. Here are the indicative numbers at different estate sizes:
| Estate Size | Annual Income (5%) | Indicative Annual Tax Saving* | Indicative 20-Year Saving* |
|---|---|---|---|
| $1,000,000 | $50,000 | $8,000 – $15,000 | $160,000 – $300,000 |
| $2,000,000 | $100,000 | $15,000 – $30,000 | $300,000 – $600,000 |
| $3,000,000 | $150,000 | $25,000 – $45,000 | $500,000 – $900,000 |
| $5,000,000+ | $250,000+ | $40,000 – $80,000+ | $800,000 – $1,600,000+ |
*Savings depend on the number of beneficiaries, their individual tax positions, the type of income generated, and the trust's distribution strategy. These figures assume income splitting across 2–3 beneficiaries including at least one minor. Actual outcomes will vary.
The return on investment: Even at the most conservative end, a $2 million estate can expect indicative tax savings of approximately $70,000–$300,000+ over the trust's lifetime. The one-off additional cost of the testamentary trust Will ($2,000–$3,000) represents a return of 23x to 100x the investment — before accounting for the asset protection benefits.
For estates that include superannuation death benefits paid to non-tax dependants, the savings can be even more significant when combined with a superannuation testamentary trust strategy.
Ongoing Costs: What to Expect After the Trust is Activated
A testamentary trust only comes into existence after the Will-maker dies and the executor activates it. There are no ongoing costs during the Will-maker's lifetime — the trust provisions simply sit within the Will, waiting to be called upon.
Once activated, the trust incurs the following annual costs:
| Cost Item | Annual Range | Notes |
|---|---|---|
| Trust tax return | $300 – $800 | The trust requires its own TFN and must lodge an annual return. Simpler trusts sit at the lower end |
| Trust accounting | $200 – $600 | Preparing annual financial statements. May be combined with the tax return fee |
| Investment management | Varies | If the trust holds investments, ongoing management fees may apply (these would apply regardless of the trust structure) |
| Legal advice (occasional) | As needed | Trust variation, appointment of new trustees, or complex distribution decisions. Not an annual cost |
In practice, the core annual cost is $500–$1,200 for accounting and tax return preparation. This is a modest cost when weighed against the tax savings and asset protection the trust provides. It's also worth noting that many of these costs — particularly investment management — would be incurred regardless, because the assets need to be managed whether or not they're held in a trust.
A Note on Trustee Responsibilities
The trustee of a testamentary trust (typically a family member you nominate in your Will) has ongoing obligations: maintaining records, making distribution decisions, lodging tax returns, and acting in the best interests of beneficiaries. While these responsibilities are manageable with professional support from an accountant, they should not be underestimated. Our Principal Lawyer always discusses trustee selection as part of the estate planning process.
When a Testamentary Trust is NOT Worth It
A testamentary trust is not the right structure for every family. Recommending one when it isn't needed would be poor advice, and at WealthShield Legal we are careful to match the structure to the client's actual circumstances.
A testamentary trust is generally not recommended when:
- The estate is below $500,000 and consists primarily of the family home with minimal income-generating assets. The ongoing accounting costs may erode the modest tax savings
- There is a single adult beneficiary with no dependants of their own. The income-splitting advantage requires multiple beneficiaries — without them, the trust adds complexity without meaningful tax benefit
- All beneficiaries are financially independent adults with no minor children or grandchildren. The adult marginal rate advantage under Section 102AG only applies to distributions to minors from testamentary trusts
- The estate is entirely superannuation and the beneficiaries are tax dependants (spouse, children under 18). In this case, the death benefit is received tax-free and a testamentary trust adds unnecessary complexity
- The Will-maker's priority is simplicity and they have no asset protection concerns, no minor beneficiaries, and a straightforward family structure. A well-drafted simple Will may be perfectly adequate
Our approach: Every client who engages WealthShield Legal for estate planning receives an honest assessment of whether a testamentary trust is appropriate for their circumstances. We will never recommend a more complex (and more expensive) structure unless the benefits clearly justify it. For clients where a simple Will is the right answer, that's the advice we give.
Even in cases where a testamentary trust is not recommended at the outset, it's worth revisiting the question if circumstances change — for example, when grandchildren are born, the estate grows significantly, or blended family considerations arise.
Frequently Asked Questions
A testamentary trust Will typically costs between $2,000 and $5,000+ depending on the complexity of the estate and the number of trusts required. This compares to $600–$1,200 for a simple Will. The additional cost reflects the specialised drafting required to create legally effective trust provisions within the Will.
Most practitioners suggest a minimum estate value of $500,000–$750,000 before a testamentary trust becomes cost-effective. Below this threshold, the setup and ongoing administration costs may outweigh the tax and asset protection benefits. However, every family's circumstances are different — if you have minor children or asset protection concerns, a testamentary trust may be worthwhile even for smaller estates.
Ongoing costs include annual accounting and tax return preparation ($300–$1,200 per year depending on complexity), potential audit fees if required, and trustee administration time. The trust requires its own Tax File Number and must lodge an annual tax return. These costs are incurred only after the Will-maker dies and the trust is activated.
For a $2M+ estate, a testamentary trust can potentially save $70,000–$300,000+ in tax over the lifetime of the trust, primarily through income splitting with minor beneficiaries who are taxed at adult marginal rates rather than penalty minor rates. The actual savings depend on estate size, income generated, number of beneficiaries, and their individual tax positions. We recommend consulting your accountant or financial adviser for specific tax calculations.
It is strongly advised against. A testamentary trust is a complex legal structure embedded within your Will. If the trust provisions are not properly drafted, the trust may fail, the intended tax benefits may not be available, or the trust may not provide the asset protection intended. This is specialised legal work that should be prepared by an experienced estate planning lawyer.
Yes — a testamentary trust serves a different purpose to a family (inter vivos) trust. A family trust operates during your lifetime, while a testamentary trust is created by your Will after death. Critically, testamentary trusts provide a unique tax advantage: income distributed to minors is taxed at adult marginal rates, not the penalty rates that apply to distributions from family trusts. They also provide asset protection for inherited wealth that a family trust may not cover.
A testamentary trust may not be worthwhile when: the total estate is below $500,000; the sole beneficiary is a financially independent adult with no dependants; there are no minor children or grandchildren who could benefit from income splitting; the estate consists primarily of the family home with minimal investment assets generating income; or the added complexity would create an administrative burden disproportionate to the benefit.
A testamentary trust can last for up to 80 years in most Australian states (the perpetuity period), though some states have abolished the rule against perpetuities. The trust terms set out in the Will determine when and how the trust can be wound up. In practice, a testamentary trust often operates for 20–40 years, spanning one or two generations of beneficiaries.