How to Set up a Trust Fund in Australia?

Setting up a trust fund in Australia is a smart way to protect your assets, plan for the future, and manage wealth efficiently. Whether you’re a family wanting to pass on money to future generations or a business aiming to safeguard investments, trusts offer flexibility and control. However, creating a trust fund isn’t as simple as filling out a form — it involves legal and financial steps that must be done correctly to avoid costly mistakes.

The key to a successful trust is a properly drafted trust deed and understanding the roles of trustees, beneficiaries, and tax obligations. At HelloLedger, we guide you through every step of setting up your trust fund so it fits your needs, stays compliant with Australian law, and maximizes benefits.

This guide explains everything you need to know to set up a trust fund in Australia the right way.

Why Set Up a Trust Fund?

Before you set up a trust fund, it’s important to be clear about your reasons. Are you:

• Looking to protect family assets?

• Providing for children or grandchildren?

• Holding business assets?

• Managing investments?

Trusts are versatile and can be tailored to suit your specific needs. For example, many families use discretionary trusts (often called family trusts) to flexibly distribute income among beneficiaries, while investors might prefer unit trusts to share profits according to fixed ownership units.

Understanding your goals will help you select the right type of trust and structure it effectively.

Choosing the Right Type of Trust in Australia

Different trusts serve different purposes and have unique tax implications. Here are the main types:

• Discretionary Trusts: Most common in Australia. Trustees have flexibility to decide how income and capital are shared. Ideal for families and small businesses wanting control over distributions.

• Unit Trusts: Beneficiaries (unit holders) own fixed portions (units) of the trust. Income and capital are distributed according to these shares, making it suitable for business partnerships and investors.

• Hybrid Trusts: Combine features of discretionary and unit trusts. Some income is distributed at trustee discretion, while other income follows fixed unit shares.

• Testamentary Trusts: Created through a will after someone passes away, often used to provide for children or vulnerable beneficiaries.

• Special Disability Trusts: Designed to support people with disabilities by protecting assets while ensuring ongoing care and financial assistance.

Your choice should align with your family or business goals and tax planning needs.

Roles and Responsibilities of Trustees

The trustee manages the trust fund and its assets. Choosing the right trustee is important because Trustees have legal responsibilities to:

• Act honestly and in good faith.

• Manage the trust according to the trust deed.

• Protect beneficiaries’ interests.

The trustee can be an individual, a group of people, or a corporate trustee. In Australia, trustees must keep clear records, avoid conflicts of interest, and follow the trust deed’s terms. Failure to meet these duties can lead to removal or legal action.

How to Draft a Trust Deed: DIY or Professional Help?

You can create a trust deed either by using a DIY template or by hiring a professional. While DIY templates may seem cheaper upfront, they often miss important details needed for legal compliance and flexibility. Mistakes or unclear wording can lead to tax issues or disputes among beneficiaries later on. On the other hand, professional help ensures your trust deed is tailored to your specific needs and fully complies with Australian laws. At HelloLedger, we provide expert trust deed drafting services designed to suit your situation and give you peace of mind.

Cost of Setting Up a Trust Deed

The cost of setting up a trust deed varies depending on the method you choose. DIY templates generally cost between $50 and $150, making them attractive for simple trusts. However, professional services typically range from $300 to $1,500, depending on the trust’s complexity. Although more expensive, professional setup helps avoid costly legal or tax problems down the track.

Settle the Trust Fund

After the trust deed is drafted and signed, the trust must be formally settled. This involves the settlor — usually someone who is not a trustee or beneficiary — making the initial contribution to the trust, typically a small amount like $10. This step officially establishes the trust. Once settled, the trustee gains full control to manage and invest the trust’s assets in line with the terms set out in the trust deed.

Register the Trust for Tax Purposes

After setting up the trust, it’s essential to register it with the Australian Taxation Office (ATO). You’ll need to apply for a Tax File Number (TFN) for the trust, and if applicable, register for GST (Goods and Services Tax). Understanding the tax obligations of your trust is vital because trusts themselves typically don’t pay tax. Instead, the income is passed through to beneficiaries, who include it in their tax returns. Trustees must also make annual trust resolutions to decide how income is distributed. Failing to comply with these tax rules can result in penalties or higher tax rates.

Open a Bank Account for the Trust

To keep the trust’s finances separate from personal or business accounts, it’s important to open a dedicated bank account in the trust’s name. You’ll need your trust deed, TFN, and identification documents to set this up. Having a separate account ensures clear tracking of income and expenses, which is essential for good trust management and compliance.

Manage Your Trust Properly

Running a trust isn’t just about setting it up; ongoing management is essential. Trustees should maintain accurate records of all transactions and decisions. Each year, trustees need to pass a trust resolution that outlines how income will be distributed to beneficiaries. This protects the trust’s tax status and prevents the ATO from taxing undistributed income at the highest rate. Additionally, it’s important to regularly review your trust deed and update it if your family or business circumstances change, provided your deed allows amendments.

Professional Help for Setting Up Your Trust Fund

Setting up a trust fund in Australia takes careful planning and must follow certain legal and tax rules. While using DIY trust deed templates might seem easy and cheap, they often miss important details that can cause problems later on.

At HelloLedger, we offer full trust setup and management services that combine legal know-how with tax advice. Our team makes sure your trust deed fits your needs, follows Australian laws, and is set up in the best way for tax purposes. We also help with managing your trust over time, including important decisions and tax reporting, so you don’t face fines and can get the most from your trust.

Trusts are great for protecting your assets, managing investments, and planning for your family’s future — but only if they are done right. With HelloLedger, you can be confident everything is handled clearly and professionally.

Ready to get started? Book your free discovery call today and let us help you set up a trust fund that works for you now and in the years ahead.