- Know the real cost before you start
Setting up a family trust typically involves $1,500–$3,000+ for the trust deed, plus $611 for a corporate trustee (if used) and ongoing costs like $1,000–$2,500+ per year for accounting and compliance. - Follow the setup steps properly
From choosing the right trustee to drafting a compliant trust deed and registering with the ATO, each step is critical to ensure your trust works as intended. - Understand how family trusts are taxed
Family trusts don’t usually pay tax themselves but strict rules apply around distributions, deadlines, and ATO compliance, and mistakes can lead to higher tax rates.
Setting up a family trust in Australia can seem straightforward, until you’re dealing with trust deeds, trustee decisions, ATO registrations, and state-based stamp duty rules. Getting it wrong could end up with tax issues, legal risks, or a structure that doesn’t deliver the benefits you expected.
In this guide, we break down how to set up a family trust in Australia step by step. You’ll learn:
- How to set it up
- How much it costs setting up a trust
- How it’s taxed
By the end, you’ll know whether a family trust suits your situation, what the setup process really looks like, and how to set up a discretionary trust correctly with confidence.
A family trust isn’t always the right choice. It works best if you have growing income, investment assets, or a need for tax flexibility otherwise, a simpler structure may be more suitable.
What is a family trust in Australia?
A family trust is a type of discretionary trust used to hold and manage assets for the benefit of family members.
- Instead of owning assets personally, a trustee, either an individual or a company, controls how income and capital are distributed to beneficiaries each year.
- This flexibility is what makes family trusts a popular structure for tax planning, asset protection, and long-term wealth management.
In practice, most people looking into a family trust setup in Australia are considering a discretionary trust, the trustee generally has discretion over distributions, within the limits set by the trust deed and tax law. If you’re planning on setting up a trust, understanding how a discretionary trust setup works is essential before moving ahead.
At a minimum, a family trust involves four key parties:
- Settlor: establishes the trust
- Trustee: manages the trust and makes decisions
- Beneficiaries: receive income or assets
- Appointor: has the power to remove and replace the trustee
One important point: a trust is not automatically treated as a “family trust” for tax purposes just because of its name. The trustee must make a formal Family Trust Election (FTE) with the ATO to access certain tax rules.
Is a family trust right for you in Australia?
Here’s a simple way to assess if a family trust setup in Australia makes sense for you:
A family trust may be right for you if you | It may not be the best option if you |
Run a business or plan to start one | Are just starting out with low or irregular income |
Invest in property, shares, or other assets | Operate as a simple sole trader |
Want flexibility to distribute income | Don’t need tax planning flexibility |
Need asset protection from risks | Want the simplest, lowest-cost structure |
Are planning long-term wealth for your family | Prefer minimal compliance and admin |
A family trust works best when you’re focused on growing, protecting, and managing wealth over time, not just saving tax in the short term.
Read more: Unit Trust vs Discretionary Trust: What’s Right for You?
How to set up a family trust in Australia step by step?
Setting up a family trust in Australia involves a series of legal and administrative steps. While the process is fairly structured, getting it right from the start is essential to ensure your trust is compliant, tax-effective, and built for long-term use.
Here’s how to set up a family trust in Australia step by step:
Step 1: Confirm a family trust is right for you
Before setting up a trust, make sure it actually suits your situation.
Consider:
- Your income level and sources
- Whether you have beneficiaries on lower tax rates
- The assets you plan to hold
- Your long-term financial goals
A family trust can be powerful, but only when used in the right context. If you’re unsure, getting expert advice early can help you avoid setting up the wrong structure.
Step 2: Choose a trustee
The trustee is responsible for managing the trust and making distribution decisions. You can choose:
- An individual trustee, or
- A corporate trustee (company)
Read more: Corporate Trustee vs Individual Trustee
For most situations, a corporate trustee is the preferred option. It offers:
- Stronger asset protection
- Easier succession if roles change
- Better alignment with lenders (especially for property)
This is a key decision in any discretionary trust setup, so it’s worth getting right upfront.
Step 3: Draft the trust deed
The trust deed is the legal foundation of your trust. It outlines:
- The trustee’s powers
- The beneficiaries
- Distribution rules
- The appointor’s role
This isn’t something to cut corners on. A poorly drafted or generic deed can lead to compliance issues or worse, loss of tax benefits.
A professionally prepared deed ensures your family trust setup in Australia is legally sound and tailored to your situation.
Step 4: Settle the trust
The trust is formally created when a settlor contributes a small initial amount (usually around $10) and signs the trust deed.
At this point, the trust legally comes into existence. The settlor should not be a beneficiary or have any ongoing role in the trust.
Read more: What Does the Settlor of Trust Do? Everything You Need to Know
Step 5: Check stamp duty requirements
Stamp duty rules vary depending on your state or territory.
In some states, you may need to:
- Pay duty on the trust deed
- Lodge documents within strict timeframes
Because rules change, it’s important to confirm current requirements with your state revenue office before finalising the setup.
Step 6: Apply for TFN and ABN
Your trust is treated as a separate entity for tax purposes and must be registered with the ATO.
You’ll need:
- A Tax File Number (TFN) (mandatory)
- An Australian Business Number (ABN) (if carrying on a business)
- GST registration (if turnover reaches $75,000+)
This step ensures your trust can operate and meet its tax obligations.
Step 7: Open a trust bank account
You’ll need a dedicated bank account in the name of the trustee.
All income and expenses must flow through this account. Mixing funds with personal accounts is a common mistake that can create compliance risks.
Step 8: Transfer assets into the trust
Once the trust is set up, you can transfer assets into it, such as:
- Cash
- Shares
- Business assets
- Investment property
Keep in mind: transferring existing assets may trigger capital gains tax (CGT) or stamp duty, depending on the asset and state. It’s important to get advice before making transfers.
Step 9: Consider a Family Trust Election (FTE)
A trust isn’t automatically treated as a “family trust” for tax purposes. To access certain tax concessions, the trustee must make a Family Trust Election (FTE) with the ATO.
An FTE can provide access to:
- Trust loss provisions
- Franking credit benefits
- Other tax concessions
However, it also comes with restrictions. Distributions outside the nominated family group can attract tax at the top marginal rate, so this decision should be made carefully.
The upfront cost of setting up a trust is relatively predictable but the real cost varies based on complexity, compliance, and how well it’s structured from the start. Cutting corners early often leads to higher long-term costs.
How much does it cost to set up a family trust in Australia in 2026?
Setting up a family trust in Australia involves both upfront setup costs and ongoing compliance expenses. The exact amount depends on your trustee structure, the complexity of your assets, and whether you need legal, tax, or accounting support.
Typical family trust costs in Australia
Cost type | What it covers | Typical amount (AUD) |
Trust deed preparation | Drafting and executing the trust deed | $1,500–$3,000+ |
Corporate trustee setup | Registering a company to act as trustee | ASIC company registration fee: $611, plus professional fees if using a provider |
Annual ASIC review fee | Ongoing company compliance if using a corporate trustee | $329 per year for a proprietary company |
Stamp duty | Payable on trust deed in some states/territories | Varies by state or territory |
Accounting and tax | Annual trust tax return, financial statements, and distribution resolutions | $1,000–$2,500+ per year |
GST registration | Required if the trust carries on an enterprise and meets the GST threshold | No ATO registration fee; GST applies if turnover is $75,000+ |
Why set up a family trust in Australia?
So, why do so many business owners, investors, and families choose to set up a family trust in Australia?
It usually comes down to one thing: flexibility and control, especially when it comes to managing income, protecting assets, and planning for the future.
Done right, a family trust can be a powerful structure. Here’s where it really makes a difference:
1. Flexibility to distribute income (and reduce tax)
One of the biggest reasons people choose a family trust is the ability to distribute income strategically.
Instead of all income being taxed in one person’s name, the trustee can allocate profits across family members each year. That means you can:
- Direct income to beneficiaries on lower tax rates
- Adapt distributions as circumstances change
- Potentially reduce the overall tax paid by the family
This level of flexibility simply isn’t available with most other structures.
Read more: Family Trust Tax Benefits: Protect Wealth, Reduce Taxes
2. Better protection for your assets
With a family trust, assets aren’t held in your personal name. The trustee holds them on behalf of the trust’s beneficiaries.
That separation can offer an added layer of protection if something goes wrong, such as:
- Business risks
- Legal claims
- Credit issues
While it’s not a complete shield, a properly structured trust can help reduce exposure and protect what you’ve built.
3. Ongoing control over how wealth is used
A key advantage of a discretionary trust setup is control. The trustee decides how income and assets are distributed, not just now, but year after year.
That means you can:
- Support different family members at different times
- Adjust to changes in income, needs, or goals
- Keep decision-making within the family
It’s a structure designed to evolve with you.
4. Smarter long-term and estate planning
Family trusts are often used as part of a long-term wealth strategy, especially for families thinking beyond the next few years.
They can help:
- Keep assets within the family
- Manage how wealth is passed down
- Maintain control across generations
For many, it’s not just about today, it’s about setting things up properly for the future.
5. A practical option for business owners and investors
If you run a business or invest in property or shares, a family trust can offer real advantages.
It’s commonly used to:
- Manage business income more flexibly
- Hold investment assets
- Structure profits in a tax-efficient way
That’s why a family trust setup in Australia is often considered by those looking to grow and protect their wealth at the same time.
How are family trusts taxed in Australia?
Understanding how a family trust is taxed is essential before you set one up. While trusts offer flexibility, they also come with strict ATO rules that need to be followed carefully.
Here are the key tax rules for trusts:
1. A family trust doesn’t usually pay tax
A family trust generally doesn’t pay income tax itself where beneficiaries are presently entitled to the trust income. If income is not validly distributed, the trustee may be assessed instead each beneficiary pays tax on their share of the trust income at their individual marginal tax rate.
This is what makes a family trust setup in Australia useful for tax planning, income can be distributed more efficiently across a family group.
2. Missing the 30 June deadline can be costly
Distribution decisions are usually required by 30 June, but the exact timing depends on the trust deed.
The trustee must:
- Pass a written distribution resolution
- Clearly define which beneficiaries receive income
If this isn’t done properly, the undistributed income may be taxed to the trustee at the top marginal rate (45%) under Section 99A.
Important:
- Resolutions cannot be backdated
- Verbal decisions are not valid
- Written records must be kept
3. Distributing to minors has limits
While income splitting is a benefit, it doesn’t apply freely to children under 18.
Under current tax rules:
- Income above $1,308 distributed to minors is taxed at penalty rates (up to 45%)
This significantly reduces the tax advantage of distributing income to children.
4. Capital gains and tax benefits
If the trust sells assets held for more than 12 months:
- It may be eligible for the 50% CGT discount
- Capital gains can be distributed to beneficiaries
In some cases, gains can be streamed to specific beneficiaries (e.g. those with capital losses), helping optimise tax outcomes.
5. Family Trust Election (FTE) rules
If a Family Trust Election (FTE) is made:
- The trust can access certain tax concessions
- But distributions must stay within a defined family group
If distributions are made outside this group:
Also worth noting:
- From 1 July 2025, interest charges (GIC) on FTDT are no longer tax deductible
6. Trust losses stay within the trust
If the trust makes a loss:
- It cannot be distributed to beneficiaries
- It must be retained and carried forward
This is an important limitation compared to other structures.
7. ATO scrutiny on trust distributions (Section 100A)
The ATO continues to focus on arrangements where:
- Income is distributed to a low-tax beneficiary on paper
- But the actual benefit goes to someone else
If flagged, the ATO may:
- Disregard the distribution
- Tax the trustee at the top marginal rate
In short: distributions must be genuine, documented, and defensible
Can you set up a family trust online in Australia?
Yes, you can set up a family trust online in Australia, but it’s important to understand what that actually involves.
While there are DIY platforms that offer basic templates, setting up a trust isn’t just about filling out a form. It requires the right legal structure, correct tax registrations, and careful planning to ensure it works as intended.
DIY vs expert setup: What’s the difference?
Feature | DIY setup | Expert setup |
Trust deed | Generic template | Professionally drafted and tailored to your situation |
Guidance | Limited | Advice on trustee, beneficiaries, and structure |
Risk | Higher risk of errors or omissions | Designed to meet ATO and legal requirements |
Support | None after purchase | Ongoing compliance and tax support |
The best approach is to combine the convenience of an online process with expert support.
A family trust can be highly tax-effective but only when managed correctly. Missing deadlines, poor documentation, or incorrect distributions can quickly remove the benefits.
How Sleek helps you set up a family trust in Australia
From trust deeds to tax returns, setting up a family trust involves more than paperwork. Sleek handles every step, so your structure is correct from day one and stays compliant year after year.
- End-to-end trust setup: Trust deed, ABN, TFN, and corporate trustee support, all handled online in one place.
- Expert structure guidance: We advise on trustee selection, beneficiary classes, and Family Trust Elections so your trust is built for your specific goals.
- Stress-free tax time: We prepare and lodge your trust tax returns on time and document trustee resolutions, no missed deadlines, no penalties.
- Ongoing compliance support: Annual resolutions, ASIC reviews, and ATO reporting managed for you, long after setup is done.
Protect your family’s wealth, reduce your tax, and plan with confidence. Schedule a call with Sleek’s experts today.
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Frequently Asked Questions
How to set up a family trust in Australia?
To set up a family trust in Australia, you need to choose a trustee, draft a trust deed, settle the trust, register for a TFN/ABN, and open a trust bank account.
Can I set up a family trust online in Australia?
Yes, you can set up a family trust online in Australia. With services like Sleek, the entire process can be handled digitally, including trust deed preparation, ATO registrations, and corporate trustee setup. You still get expert guidance along the way, so your trust is structured correctly from the start, without needing to visit a lawyer or accountant.
How long does it take to set up a family trust in Australia?
Setting up a family trust can be done quite quickly. The trust deed can often be prepared the same day, while ABN and TFN registration with the ATO typically takes 1 to 28 days. Opening a trust bank account usually takes a few business days. In most cases, you can expect your trust to be fully set up and operational within 2 to 4 weeks.
