Under 18s earned vs unearned income and term deposits/IPs

This I'm sure is a legal + tax question but I'm mulling things over in my brain not to get a specific answer but some ideas and suggestions on possible paths.

I'm considering wills and estates and how inheritances are looked after up to 18.

Lisa Simpson is 15 and inherits a sum of money from long lost Uncle Apu that says the Executor will hold in trust until age 18 and can invest the money on behalf.

What would Executors "normally" do in this instance
1. put in a term deposit and the interest is declared as unearned income by the minor at terrible tax rates?
2. put the funds into a Trust with a corporate trustee and child as beneficiary and then into a term deposit and distribute to child and it's still unearned and horrible tax
3. put funds into a trust with a corporate trustee and bucket company. Put money into term deposit and roll interest into bucket company and don't distribute to minor?
4. variants of above but instead of term deposit could they purchase an IP. I'm guessing an IP income is still unearned income though?

I'm rather vague on this as I really don't know how it works but curious about ideas we should explore if we should die before our kids are 18. We are currently set up for testamentary trusts but I don't know what I don't know and they might inherit from long lost Uncle Apu and we may need to help sort out the best way to manage an inheritance.

 

Executors administer the estate and then the money would go to the trustee, or the executors would begin to hold the money as trustee once administration is complete.

The trustee would be legally obliged to invest the money in a prudent manner if not specified by the will
s102AG ITAA36 allows for the income to be taxed at adult rates. s99A I think allows for this in cases even where the income is not distributed to the beneficiary.

if the will contains a testamentary discretionary trust the terms could be very broad.

 

Thanks @Terry_w I had assumed it would be at the normal child unearned rates so it's good to know that it might not be.
I'll read up on s102AG ITAA36
Much appreciated!

 

As far as I understand, an inheritance is taxed differently to minors compared to a person simply putting an investment into a child’s name.
Marg

 

The executor would hopefully invest prudently.
(Usually) the child is not not presently entitled to the income or capital until they turn 18 (or whatever age)
The income is thus taxable to the trustee; the tax rates are normal adult rates on the income from proceeds from deceased estates, until the child is 18.

 

A deceased estate has a tax free threshold for at least three years and in any event where the trustee holds in the manner qak has mentioned the trustee obtains a tax free threshold. This is not unlike a testamentary trust. Its likley that the deceased estate wont distribute to the child until 18. If they do it is excepted income.

The trust income is considered excepted income for the childs share and doesnt attract punitive rates. This is not different if they works at Maccas too, or a have a small business too. Thats earned income and is also excepted. Some other passive investment income can sometimes be excepted too.

Your income if you are under 18 years old