Here is an example of how a testamentary trust can reduce tax.
Your uncle has recently died and his estate has $2.5 million in cash that he wishes to leave to you.
You have a non-working spouse and two minor children (under 18 years of age).
You earn $180,000 pa in income, so you’re in the top marginal tax rate.
If you were to receive the $2.5 million inheritance directly and invested it in cash at 2% pa, earning interest of $50,000, you would pay tax of $22,500 plus Medicare Levy of $1,000.