A family trust had four distinct roles, here we outline those four roles and who usually fills them.

1. The settlor

The settlor is usually someone unrelated to the beneficiaries of the trust, such as an accountant, lawyer or close family friend. For tax reasons, the settlor should not be a beneficiary of the trust. The settlor usually has no further involvement with the trust after the initial settlement.

2. The trustee(s)

The trustee is the person / legal entity responsible for administering the trust in accordance with the terms of the trust deed.

A discretionary trust deed generally gives the trustee broad investment powers (which can be added to if necessary) and the absolute discretion to make decisions and exercise powers in relation to the trust assets without having to give any reasons. The trustee is required to comply with the terms of the trust deed, Trustee Act (or similar legislation) in the relevant State or Territory of Australia where the trust is established and trust law.

The trustee may be one or more individuals or a private (i.e. proprietary limited) company specifically setup to act as trustee. Despite the initial cost of acquiring a company, it is generally recommended that a company act as trustee of a discretionary trust in order to minimise the risk of personal liability (which is greater for individual trustees than for directors of a corporate trustee) and avoid unnecessary administration (which requires changes to be made in respect of the registered owner of each trust asset where there are changes in individual trustees).

3. The appointor(s)

The appointor is the ultimate controller of the trust as the appointor generally has the power to remove and appoint the trustee and determine the trustee's remuneration. Generally, the person who wished to establish the trust is nominated as appointor, either alone or together with a relative or associate (e.g. husband and wife). Where multiple appointors are nominated to act unanimously the trust assets can be protected and control of the trust can be retained in case of bankruptcy, divorce and other similar circumstances. Legal advice should be sought if these issues are of concern to you.

4. The beneficiaries

The beneficiaries are the main persons or entities intended to benefit from the trust. Generally, the beneficiaries are a person and their family members. Our trust deed enables you to insert the name of one or more persons who will be the primary beneficiaries of the trust. The remaining beneficiaries are the spouse, children, grandchildren and related companies and trusts of the primary beneficiaries.

Discretionary Trust Information

Need more info? Check out our what is a discretionary trust and setup a trust guide pages.


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