Family trusts and succession planning: what may change under the 2026–27 Federal Budget?

The Budget includes a proposed 30% minimum tax on thetaxable income of discretionary trusts commencing 1 July 2028.

The measures are not yet law. Their operation will depend on the final legislation enacted.

1. What is a testamentary trust?

A testamentary trust is a trust established by will that begins operating after the death of the person who makes the will.

Testamentary trusts are vehicles used by families to hold and manage inheritances which may provide assets protection advantages for beneficiaries of their estates.

The Government has announced that income from discretionary testamentary trusts would be excluded from the proposed 30% minimum tax where the trust is established for genuine testamentary purposes.

The proposed exclusion would be limited to income connected with assets from the deceased estate, with further conditions applying tot rusts established on or after 1 July 2028.

The detailed operation of the exclusion will depend on the terms of the final legislation.

2. How Veterans First Legal can assist

At Veterans First Legal we can advise you in relation to the proposed legislative changes and what they mean for your family, wills and succession planning.

We can provide you with tailored advice on how these changes may impact your estate plan, explain your options, and make appropriate recommendations to ensure your wishes are carried out.

This article provides general information only and does not constitute legal advice.

Please do not hesitate to contact Veterans First Legal if you would like to discuss you will and succession planning arrangements.