What are the benefits of a trust?
- The trust can provide limited liability protection to the family group.
- Individual tax-free thresholds can be used to access favourable taxation rates.
- It provides a way to pass family assets from one generation to the next.
- It helps avoids issues such as challenges to the will following the death of a senior family member.
What is a settlor?
A settlor is the one who gives the assets to the trustee to hold for the beneficiaries. The settlor executes the deed and then usually has no further involvement with the trust.
What is an appointor?
An appointor is the person named in the Trust Deed who has the power to remove and appoint trustees.
In general, due to the control issues, the appointor/s should in most cases include at least one of the people setting up the trust, such as one of the primary beneficiaries.
What is a trustee?
The trustee is the legal owner of the trust property, although not the beneficial owner. The trustee carries out all transactions of the trust in its own name and must sign all documents for and on behalf of the trust.
A trustee is responsible for managing the trust and its assets. Trustees can be one or more individuals or corporations, and are responsible for the distribution of any assets to the trust’s beneficiaries.
What is a beneficiary?
A beneficiary is an individual, corporation or charitable organisation that receives income or assets from the trust. Beneficiaries are named in the schedule to the trust deed, however anyone fitting the description of the general class of beneficiaries set out in the schedule can also be named as beneficiaries.
Do I need an ABN for the trust?
If the trust is carrying on an enterprise in Australia, as the trustee you must register for an ABN for the trust. If you’d like more information on ABN registrations and whether you’re eligible, check out our article 'What's an ABN registration, and do I need one?'
Can a trustee also be a beneficiary?
A trustee can also be a beneficiary, but not if they are the sole trustee and sole beneficiary. A trustee can be listed as a beneficiary so long as their name and capacity are stated within the deed.
For example: ‘AA Pty Ltd in its capacity as the trustee of the AA Family Trust’
Can a company be a beneficiary?
Yes, because a company is a separate legal entity, they can be listed as a beneficiary in a discretionary trust.
Can there be more than one corporate trustee?
Yes, two corporations can be appointed to act jointly as trustees of the trust. However this does make running the trust much more difficult.
Can a charity be a beneficiary?
Yes, so long as you are very specific as to whom you wish to benefit and in what capacity they’re acting (such as company, trustee etc). For example, ‘homelessness awareness’ is too vague, but ‘The Smith Family Australia’ would be accepted.
Will a trust give me asset protection?
A trust can provide asset protection, however we recommend seeking legal advice to ensure your particular requirements are met by the trust deed.