Many people decide to establish a Family Trust primarily because they want to minimise their tax. While this is a sound motive, there is another major reason for establishing a Family Trust, and that is for the PEACE OF MIND that a trust can provide.

Family Trusts are attractive vehicles to hold assets, but they are also popular because of their flexibility. Trusts allow assets to be housed and passed from one family member to another, including transfers from one generation to another. This is done simply by appointing new trustees or trustee directors instead of trading assets between individuals, which can be a costly and time consuming exercise.

Family Trusts are different from Unit Trusts where individuals receive mathematically proportioned amounts of the returns. The Family Trust, also sometimes known as Discretionary Trusts, can be adapted and moulded to accommodate the specific needs of different family members.

The trustee who is appointed by the entity to make decisions on behalf of the trust, can elect to  distribute capital gains and pay franked dividends.

As protection, holding assets in a trust rather than in the name of a family member prevents the risk of losing any of the assets should the individual fall into unexpected financial difficulties. The Family Trust excels both in the context of distribution, and its ability to equitably control how much each individual family member receives. The trustee decides how and what is distributed to whom.


The Family or Discretionary Trust is established as follows :-

Settlor – This is usually an associate or a friend outside the family. The “Settlor” usually engages an “Appointer”.

Appointer – This is usually the matriarch or patriarch of the family, entrusted with the power to appoint a “trustee”. Appointers can also appoint themselves as the “Trustee”.

The Trustee – He/She is in charge of making decisions on behalf of the Trust. Usually, the accountant advises that the single purpose “trustee company” has been established, which ensures the trustee’s assets remain separate from the trust’s assets.

Directors – Directors who are appointed to the trustee company will have the power to influence the decisions made in relation to the trust.

Control – With the Trust, the trustee company is 100% owned by the family. Therefore, it should be easy for the family to make decisions.

Distribution – There is a requirement to distribute annual income among eligible beneficiaries every year. It is recommended that prior to 30th June of each year, a financial health check is conducted to ascertain the best way to distribute the income earned during the period. Family trusts currently have an 80 year shelf life. However, there is ongoing lobbying to have this structure last into  perpetuity, similar to that of a company structure.