What a family trust actually is
A family trust is a legal arrangement where one party holds assets on behalf of others. In Australia, when people say "family trust" they almost always mean a discretionary trust set up to benefit members of a family group. The trust itself is not a separate legal person in the same way a company is — it is a relationship governed by a written document called the trust deed.
The structure separates legal ownership from beneficial ownership. The trustee legally owns the trust's assets and signs contracts on behalf of the trust, but the people who benefit economically — the beneficiaries — are a different group entirely. That separation is what makes the structure useful for income flexibility and, in some cases, estate planning.
Discretionary is the key word. In a discretionary family trust, no beneficiary has a fixed entitlement to income or capital until the trustee decides, year by year, who gets what. The trustee exercises discretion within the rules set out in the deed. This is what differentiates a family trust from a unit trust, where each unit holder has a fixed proportional entitlement.
Trusts in Australia are regulated through a mix of state trust legislation, the Trustee Acts of each state, and federal tax law administered by the Australian Taxation Office (ATO). Family trusts are common, well understood, and routinely set up — but they are not a one-size-fits-all answer to every business or investment problem.
In one line
A discretionary family trust is a deed-based arrangement where a trustee holds assets for a defined family group and decides each year how income and capital are distributed.
Who tends to use a family trust
Family trusts are used across a wide range of situations, and the right answer for you depends on what you are actually trying to achieve. The most common uses fall into a few categories worth walking through.
Business owners sometimes hold a trading business inside a discretionary trust, often with a corporate trustee. This can offer income flexibility across adult family members and a degree of structural separation between the business and the individuals running it. The trade-offs include extra setup cost, ongoing compliance, and slightly more complex tax reporting.
Investors use family trusts to hold passive assets — shares, managed funds, or commercial property — outside of personal names. Capital gains made by the trust can generally flow through to beneficiaries, who pay tax at their own marginal rates. The 50% capital gains tax discount can still apply for assets held longer than 12 months, subject to the rules the ATO sets each year.
Families planning across generations sometimes use trusts to keep assets within a defined family group and to manage how wealth passes between generations. This is an area where personal legal advice is essential — a deed is a long-lived document and small drafting choices have big consequences down the track.
When a trust is probably not the right fit
If you are a freelancer earning under the Goods and Services Tax (GST) registration threshold of $75,000 and you have no plans to bring others into the business, a family trust is almost always overkill. A sole trader Australian Business Number (ABN) is cheaper, simpler, and easier to wind up.
If you have a co-founder you are not related to and you want clean equity ownership, a Proprietary Limited (Pty Ltd) company is usually the better starting point. Trusts are designed for family groups — they do not map cleanly onto arms-length business partnerships.
The four roles inside a family trust
Every discretionary family trust has the same handful of roles defined in the deed. Getting clear on who plays which role — and why — is the most important part of the setup conversation.
These roles are not interchangeable. The deed sets out exactly what each one can and cannot do, and the choices made at setup can be difficult or expensive to change later.
Settlor
The settlor is the person who legally creates the trust by paying a small nominal sum — often $10 or $20 — to the trustee. Once the settlement is made, the settlor generally has no further role. For tax reasons, the settlor should not be a beneficiary or someone closely connected to the family. Your accountant or solicitor will usually nominate a suitable independent person.
Trustee
The trustee is the legal owner of the trust's assets and the party that signs every contract, bank form and lease on the trust's behalf. The trustee can be one or more individuals, or it can be a company set up specifically to act as trustee. Choosing between an individual trustee and a corporate trustee is one of the more consequential decisions in the setup process — more on that below.
Beneficiaries
Beneficiaries are the people (and sometimes entities) who can receive distributions of income or capital from the trust. In a discretionary family trust the deed typically defines a broad class — spouse, children, parents, siblings, related companies and related trusts — and gives the trustee discretion to choose, each financial year, who actually receives what.
No beneficiary has an automatic right to anything until the trustee resolves to distribute to them. That is the whole point of "discretionary" — the trustee decides each year, within the rules of the deed.
Appointor
The appointor — sometimes called the principal or guardian — is the person who can hire and fire the trustee. They do not run the trust day-to-day, but they hold the ultimate control because they decide who is in the trustee chair. In family trusts, the appointor is often the founding parent or couple. Succession of the appointor role is set in the deed and should be discussed with your solicitor as part of estate planning.
Why a corporate trustee is usually the cleaner approach
Once you have decided to set up a family trust, the next question is whether the trustee should be a person (or several people) or a purpose-built company. Both are legal. Both are used. But for most families setting up a long-term trust, a corporate trustee is the cleaner approach, and it is what accountants typically recommend.
A corporate trustee is a Proprietary Limited company whose only job is to act as trustee of the trust. It does not trade in its own right, it does not hold its own assets, and it does not earn its own income. Because of that limited purpose, the Australian Securities and Investments Commission (ASIC) charges a reduced annual review fee for a special-purpose company. In 2025–26 the special-purpose annual review fee is $67, compared to $329 for a standard company.
The benefits over an individual trustee are practical, not theoretical. Asset titles, bank accounts and contracts stay in the company's name regardless of who is currently a director, so there is no need to retitle assets every time a trustee changes. Limited liability also gives the people behind the trustee a layer of separation from the trust's contracts (though this is not the same thing as the trust itself having limited liability — see the section on asset protection below).
Corporate trustee vs individual trustee at a glance
| Consideration | Corporate trustee | Individual trustee(s) |
|---|---|---|
| Who legally owns trust assets | The trustee company | The individual(s) named, jointly |
| Changing the trustee | Update directors — assets stay in company name | Retitle every asset, update bank and contracts |
| Annual ASIC fee 2025–26 | $67 (special-purpose) per ASIC | Nil — no company involved |
| Separation from personal liability | Stronger — contracts are with the company | Weaker — contracts are with you personally |
| Typical setup cost | Trust deed + trustee company registration | Trust deed only |
| Common use | Long-term family trusts, business trusts, SMSFs | Smaller, simpler, short-life trusts |
Special-purpose company status
A company can be flagged as special-purpose with ASIC if its constitution restricts it to acting only as trustee (or only as a Self-Managed Super Fund (SMSF) trustee, or only as a not-for-profit). The reduced $67 annual review fee, set by ASIC for 2025–26, applies as long as the company continues to meet that restriction. If the company ever starts trading in its own right, special-purpose status is lost and the standard $329 fee applies. Structly's Trustee Company package sets the constitution up correctly for this from day one.
How a family trust actually gets set up
Setting up a discretionary family trust is a sequence — each step depends on the one before it. The order matters, particularly because state stamp duty rules in some jurisdictions require the trust deed to be stamped within a set window after settlement of the trust.
The typical sequence followed by accountants and registered agents in Australia looks like this, end to end:
- Decide on the structure with your accountant or solicitor — corporate or individual trustee, who the appointor will be, the intended beneficiary class.
- If you are using a corporate trustee, register that company first through ASIC. Structly's Trustee Company package handles the registration, the special-purpose constitution and the Australian Company Number (ACN) for $699 (includes the $611 ASIC fee).
- Have the trust deed drafted. This is a legal document and should be prepared by an accountant or solicitor who routinely drafts deeds. Pricing varies but is typically in the $500–$1,500 range depending on complexity.
- Sign and date the deed. The settlor pays the settlement sum (commonly $10) to the trustee to formally create the trust.
- Pay state stamp duty on the deed where applicable. New South Wales and Victoria, for example, charge nominal stamp duty on discretionary trust deeds. The amount and lodgement window varies by state.
- Apply for an ABN and Tax File Number (TFN) for the trust through the Australian Business Register (ABR). If the trust expects to turn over $75,000 or more in GST-relevant supplies, register for GST at the same time.
- Open a bank account in the trustee's name "as trustee for" the trust. Most banks will ask to sight the stamped deed and the company's ASIC documents.
- Lodge a Family Trust Election with the ATO if your accountant recommends one — this can be useful where the trust expects to distribute through related companies or claim certain franking credit benefits.
Order matters
Register the trustee company before the deed is signed. The deed names the trustee, and the trustee needs to legally exist on settlement day.
What it costs to set up and run
Stamp duty on the deed and ongoing accounting fees are the two costs people most often underestimate. Both are quotable up-front by your accountant — ask before you commit. If late lodgement of the annual review with ASIC ever becomes an issue, the late fees are $98 for 1–28 days late and $411 for more than 28 days late in 2025–26.
Indicative one-off and recurring costs for a family trust with a corporate trustee
| Item | When | Typical cost | Who charges it |
|---|---|---|---|
| Trustee company registration (incl. ACN) | Setup | $699 | Structly — includes $611 ASIC fee |
| Trust deed drafting | Setup | Varies (commonly $500–$1,500) | Your accountant or solicitor |
| State stamp duty on deed | Setup | Varies by state | State revenue office |
| ABN, TFN and GST registration | Setup | Included if bundled with Structly setup | ABR / ATO (no government fee) |
| ASIC annual review (standard trustee company) | Annually | $329 (2025–26) — $67 applies only to sole-purpose SMSF trustees | ASIC |
| Trust tax return and financial statements | Annually | Varies | Your accountant |
Common misconceptions about asset protection
Asset protection is the single most over-claimed benefit of family trusts. The structure does offer some genuine protections, but it is not a force field, and several of the things people assume it does, it does not.
What a family trust with a corporate trustee can do: separate legal ownership of assets from the individuals behind the trust, give a layer of separation between contracts entered into by the trustee company and the personal assets of its directors, and make it harder for creditors of an individual beneficiary to reach trust assets directly because no beneficiary has a fixed entitlement until a distribution is made.
What a family trust cannot do: protect you from your own personal guarantees (banks routinely require directors to personally guarantee trust borrowings), protect you from director duties (directors of a trustee company still have full duties under the Corporations Act), or quarantine assets that were transferred into the trust at a time when you were already insolvent or facing known creditors. Transactions that look like they were done to defeat creditors can be unwound by a court.
Bankruptcy law also has clawback provisions that can reach back several years to recover assets transferred to a related trust. The Australian Financial Security Authority publishes the relevant timeframes — they are not short. Setting up a trust is a long-term structural decision, not a last-minute shield.
This is general information
Asset protection is highly fact-specific and changes depending on your state, your industry, and your personal circumstances. Speak to your accountant or solicitor before relying on any structure for protection.
Where Structly fits in
Structly is an ASIC Registered Agent (#53096) and Digital Service Provider, based in Brisbane. We do not draft trust deeds and we do not give tax or legal advice — that work sits with your accountant or solicitor, who already knows your situation. What we do is the company-registration side of the setup.
Our Trustee Company package is $699 all-in: the $611 ASIC fee passes through to ASIC at cost, and the $88 service fee covers the application, the special-purpose constitution that locks the company to acting as trustee only, the company register, the ACN and the documents you will need to provide your bank and your accountant.
Stanley, our setup helper, can walk you through whether a trustee company is the right vehicle for your situation in a short conversation. If your accountant has already drafted the deed and just needs the trustee company registered, you can go straight to the Trustee Company package.