Testamentary trust administration — year 1 checklist (AU)
Testamentary trusts offer powerful tax and asset protection benefits — but only if they are set up and administered correctly in year one. This checklist covers the 12 steps to lock in the benefits.
This is a 12-step administration checklist for the first year of a testamentary trust (TT) in Australia. It covers establishment, TFN, bank accounts, asset transfer, minors and excepted trust income, resolutions, and first-year tax return obligations. Use it at the point probate is granted.
The checklist
Obtain grant of probate and accept trusteeship
Confirm probate has been granted. Trustee formally accepts trusteeship in writing.
Register the trust
Register the trust with the ATO, obtain TFN and ABN, and register for GST if required.
Open trust bank accounts
Open trust bank accounts separate from the estate and any personal accounts.
Transfer estate assets in specie
Transfer assets from the executor to the trust in specie, using CGT rollover under s 128-10 where appropriate.
Identify primary and secondary beneficiaries
Map primary, secondary, and tertiary beneficiaries under the will. Confirm minor beneficiaries for excepted income.
Apply excepted trust income for minors
Confirm income paid to minors from the TT qualifies as excepted trust income (taxed at adult rates, not penalty rates).
Check the trust deed and will provisions
Read the TT provisions in the will carefully — definition of income, streaming, appointor succession.
Prepare investment strategy
Prepare a trustee investment strategy consistent with the trust purpose and any will instructions.
30 June distribution resolution
Trustee resolution by 30 June of the first income year the trust has net income.
Streaming and franking
Stream capital gains and franked distributions consistent with the will provisions.
First trust tax return
Lodge first trust tax return and beneficiary statements.
Review dispute and challenge risk
Confirm family provision challenge periods have expired before distribution; address any notified claims.
When this checklist applies
Use this checklist at the moment of probate — year-one administration mistakes (particularly around excepted income and resolutions) are difficult to undo.
Common pitfalls
- Mixing estate and trust accounts — lose CGT rollover
- Missing excepted trust income requirements — minors taxed at penalty rates
- Late resolutions — trust income taxed at 47% in trustee hands
- Distributing before family provision periods close — personal liability
- Ignoring the distinction between estate and trust phases
Run this checklist on a real matter
Quillio runs first-year TT administration, drafts resolutions and beneficiary statements, and tracks family provision limitation periods. See /practice-areas/wills-estates-lawyers or start a free trial.
Testamentary trusts are high-value structures with significant tax consequences. Use this checklist alongside specialist estate and tax advice.
Use this checklist on your matter.
Quillio can run this checklist on a specific NSW conveyancing matter — confirm each item, calculate adjustments, and generate the supporting documents. The free trial requires no credit card.
Start your free trial