Family Trust Set Up
Services
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A family trust (discretionary trust) is a legal structure where a trustee holds assets for the benefit of family members, governed by a formal trust deed. It can help with managing income, planning for future generations and protecting key assets, while staying compliant with Australian tax law.
Why Choose ACT Tax Group for Family Trust Set Up
Manage Tax Appropriately Within Legislation
We facilitate the compliant establishment of your family trust and manage its tax administration. A discretionary trust lets you distribute income or capital to family members based on their individual tax positions and marginal rates, helping beneficiaries benefit from unused tax-free thresholds. We ensure distributions reflect genuine family dealings and comply with Section 100A rules to keep you within tax law.
Asset Protection as Part of a
Broader Plan
We help you understand how a family trust separates trust assets and trust property from your personal name as part of broader asset protection and succession planning. A corporate trustee provides stronger liability protection for your business and the assets held in the trust. However, protection isn't absolute—it can be impacted by personal guarantees or Family Law settlements. We recommend legal advice on your family trust deed, while we handle the tax structure and ATO registration compliance.
Practical Compliance and Record-Keeping
We guide you through managing trust assets, opening a bank account, and completing your annual trust tax return. Trustee resolves and distribution resolutions must be formally documented, signed, and dated by 30 June each financial year. Missing this deadline means the trustee pays tax at 47% (top marginal rate plus Medicare levy) on undistributed income. We ensure your trustee obligations are met and returns lodged by the deadline, preventing penalties and compliance audits. Our team maintains vital records year-round.
Flexible Income Distribution
(with clear limits)
We explain how the trustee decides each financial year how to distribute income or capital among family members and relevant beneficiaries. Minors face strict unearned income rules under Division 6AA: only $416 tax-free per year, then 66% tax rates, reaching 45% at approximately $1,307. We provide professional advice to families with young beneficiaries on exceptions like testamentary trusts and help you structure your family trust election and discretionary trust deed to meet your succession planning and family control objectives.
Why Set Up Your Family Trust With Us?
A family trust may be useful for families, investors and small business owners wanting flexible ways to hold investments and manage assets over multiple financial years. Suitability depends on your specific circumstances, as trusts require strict ongoing administration and may not be efficient for assets with negative gearing (losses). This structure can be helpful for:
- Families holding investments, a family business or property in one place instead of separate accounts, making it easier to manage assets and keep family control.
- Families where the trustee distributes income or capital to beneficiaries based on their individual tax positions and circumstances.
- Families planning for future generations, where the trust continues beyond any one person's lifetime and can support succession planning.
- Small business owners separating business assets from personal assets for protection and long-term planning.
In some cases, the trustee may make a formal family trust election, so the trust is treated as a family trust for tax purposes. Important: A Family Trust Election (FTE) locks the trust into a specific “family group,” and distributing outside this group triggers a 47% Family Trust Distribution Tax.
Set Up Your Family Trust Today
Benefits of Family Trust Setup Services
Tax-Compliant Planning
A family trust can support tax compliance by distributing income to beneficiaries with lower incomes or unused tax-free thresholds. Minors are limited to a small amount of tax-free unearned income (currently around $400 per year), with steep penalties above that. Distributions must reflect genuine family or business arrangements, never artificial tax outcomes.
Simplified Financial Management
Once established, the trustee opens a bank account in the trust’s name. Using one central structure simplifies record-keeping of assets, income and distributions, streamlining tax returns and communication with the state revenue office.
Investment and Long-Term Planning
Trusts are effective for holding appreciating assets (like shares or property) where the 50% Capital Gains Tax (CGT) discount can be passed to beneficiaries. It works alongside fixed trusts, unit trusts, companies or testamentary trusts, depending on your broader plans.
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Optimising the Service Structure
We coordinate with legal providers to establish a compliant deed that correctly defines your “Appointor,” “Trustee,” and “Beneficiaries” from day one. Distribution decisions should be documented, records kept accurate, and all obligations to the ATO and state revenue office met on time.
What to Do Next
Contact ACT Tax Group to discuss your family, business, assets and goals. We will assess your profile to determine if a family trust is the correct vehicle for you, or if alternatives like a company or unit trust better suit your risk profile and tax position.
Frequently Asked Questions
What is a family trust and how does it work?
A family trust is a discretionary trust where a trustee holds assets for family beneficiaries. The trustee decides each financial year how to distribute income or capital, and beneficiaries pay tax at their own tax rate. While optional, a Family Trust Election may be required to pass franking credits to beneficiaries or utilise tax losses, though it restricts distributions to a specific family group.
Can a family trust help with tax and asset protection?
A family trust can support tax-compliant planning and form part of broader asset protection and succession planning. Note that assets may still be exposed if the trustee is an individual, which is why we often recommend a Corporate Trustee structure for clearer liability separation. Distributions must be genuine and in beneficiaries’ best interests, never used for tax avoidance.
How is a family trust different from a company or a fixed trust?
In a family trust, the trustee has discretion over distributions each year. In a company, ownership is through shares and income is taxed at company level first. In a fixed trust, beneficiaries have fixed entitlements, not trustee discretion.
What are the special tax rules for minor beneficiaries?
Distributions to beneficiaries under 18 face special higher tax rates on most unearned income. Only a small amount (currently around $400 per year) is effectively tax-free; amounts above approximately $1,300 are taxed at the top marginal rate of 45%. Exceptions may apply to testamentary trusts, so professional advice is essential.
What ongoing obligations does a trustee have?
The trustee must follow the trust deed, act in beneficiaries’ best interests, keep accurate records, document distribution resolutions before 30 June each year, and lodge the trust tax return by the relevant deadline. The trustee may also need to deal with the state revenue office regarding duty or land tax on trust property.
Important Disclaimer
The information contained on this website is provided for general use only. It has been prepared without consideration of any individual’s personal objectives, financial situation, or needs. Any reliance placed on the material is at the reader’s own risk.
Nothing on this website should be taken as taxation, accounting, or legal advice. ACT Tax Group Pty Ltd, its directors, and employees expressly disclaim all liability for any loss, damage, cost, or expense incurred by any person who relies, wholly or partly, on the information provided.
Tax legislation, rulings, and regulatory requirements may change at any time, and their application will vary depending on specific circumstances. You should seek independent, professional advice from a registered tax agent or qualified adviser before making decisions based on this information.
Have Questions?
Contact Us Today!
Contact ACT Tax Group to schedule a complimentary consultation. We will clarify the administrative realities of a trust, including the requirement for annual meetings and resolutions to ensure you are comfortable with the ongoing obligations.