Testamentary trusts continue to offer protection for inheritances against relationship breakdowns, bankruptcy, and creditors, even if changes are proposed.

If leaving shares to two children, discuss preferences between shares and cash and plan strategies to realize capital gains at lower tax costs during retirement; death itself does not trigger CGT, but beneficiaries may owe CGT on sale.

Under current rules, retained trust income is taxed at the top marginal rate of 47 percent (including the Medicare levy) for both family and testamentary trusts.

The current framework taxes distributed income from a trust at 30 percent through a tax payable by the trustee, with a tax credit flowing to the beneficiary; if the beneficiary’s personal rate exceeds 30 percent, they pay the difference, while if it is lower, there is no further refund.

Proposed changes introduce a 30 percent minimum tax on income distributed to beneficiaries, rather than on income retained by the trust.

The 30 percent minimum tax mainly affects low‑income beneficiaries, and some company beneficiaries could be worse off because they wouldn’t receive a credit for the 30 percent already paid by the trustee.

Tax planning should include obtaining a professional valuation by June 30, 2027 for assets retained beyond that date, with valuations reflecting market value and proper documentation.

For properties bought before mid‑May 2026, negative gearing restrictions do not apply; if you convert to rental, you can still deduct expenses, and the six‑year absence rule may preserve the principal residence CGT treatment while renting.

Consult a professional for tailored advice, and remember that the information here is general in nature.