Yes, an accountant can help set up a family trust, but there is an important distinction between providing accounting and tax advice and preparing the legal documents that establish the trust.
Your accountant can help you decide whether a family trust makes sense for your circumstances, consider the tax implications and help structure it around your broader business and financial goals. However, a family trust is established through a legal document known as a trust deed, so legal expertise is required as part of the process.
For established business owners, this is where good advice matters. Rather than simply asking, “Can I set up a family trust?”, the better question is often, “Is a family trust the right structure for what I want to achieve?”
What Is a Family Trust?
A family trust is generally a type of discretionary trust used to hold and manage assets for the benefit of a group of beneficiaries, often members of a family
There are several important roles involved:
- Trustee: The person or company responsible for managing the trust.
- Beneficiaries: The people or entities who may benefit from the trust.
- Appointor: A person with certain powers relating to control of the trust, as defined by the deed.
- Settlor: The person who initially establishes or “settles” the trust.
The exact structure and roles depend on the trust deed and your circumstances.
What Can an Accountant Help With?
At Core Business Accountants we can help you look beyond the paperwork and understand the financial implications of establishing a family trust.
Depending on your circumstances, this may include:
- Assessing whether a trust is suitable for your broader business structure
- Explaining the tax implications
- Considering how the trust may interact with existing companies or other entities
- Discussing individual versus corporate trustees from an accounting and tax perspective
- Assisting with relevant tax registrations
- Helping manage ongoing accounting and tax obligations
- Reviewing the structure as your business and circumstances change.
A trust can have ongoing tax and reporting requirements. For example, ATO trust tax return documentation includes details such as the trust’s TFN, ABN where applicable and trustee information.
That means the relationship with your accountant does not end once the trust has been established.
How Does Setting Up a Family Trust Work?
The exact process depends on your circumstances, but there are several common stages.
1. Understand why you are considering a trust
Start with the objective, not the structure.
Are you evaluating how your company is organized? Are you purchasing or retaining investments? Are you considering tax strategy or how your wealth could be managed and preserved over the long run?
Your goals should guide the discussion.
2. Review whether a family trust is suitable
Your accountant can review your current position and help you understand how a family trust may fit within it.
This is particularly important for established business owners who may already have companies, investments or other structures in place. Adding another entity should have a clear purpose.
3. Determine the structure and key roles
If a trust is appropriate, decisions need to be made about matters such as the trustee, beneficiaries and other key roles.
A corporate trustee may also be considered. The right approach depends on the circumstances, so this is an area where tailored accounting and legal advice can be valuable.
4. Prepare and execute the trust deed
The trust deed sets out how the trust operates, including the powers and responsibilities of the trustee and the rules governing beneficiaries and distributions.
Because the deed is a legal document, appropriate legal advice should form part of this stage.
5. Complete the accounting and tax setup
Once established, the trust may require a TFN, an ABN where relevant and other registrations depending on its activities.
Your accountant can help determine which registrations apply and assist with the ongoing accounting and tax requirements.
Why Do Business Owners Consider Family Trusts?
Family trusts can offer flexibility, but the potential advantages depend heavily on the circumstances.
For established business owners, discussions around trusts may form part of broader planning involving:
- Tax planning
- Business structuring
- Holding investments or business interests
- Succession and estate planning
- Management of family wealth
- Asset protection considerations.
A discretionary trust can provide flexibility around distributions because beneficiaries generally do not have a fixed entitlement until the trustee exercises its discretion.
However, having that flexibility does not mean every distribution will produce a tax advantage. Trust taxation has detailed rules, and the tax outcome depends on the trust deed, beneficiaries, distributions and other circumstances.
Is a Family Trust Right for Every Business Owner?
No. A family trust is not automatically the best choice simply because you own a successful business or have accumulated assets.
Trusts add another layer to your financial affairs. There are establishment considerations, ongoing accounting requirements and legal obligations to manage.
Before setting one up, it can help to ask:
- What am I trying to achieve with the trust?
- How will it fit with my current business structure?
- Who will control the trust?
- Who will be the beneficiaries?
- What are the tax implications?
- What ongoing administration will be required?
- How does the structure fit with my longer-term plans?
These questions are particularly relevant if your business or investment position has changed significantly since your existing structure was established.
Getting the Structure Right From the Start
A family trust should be considered as part of your wider financial position, rather than as a standalone tax strategy.
At Core Business Accountants, we help Sunshine Coast business owners gain greater clarity around their finances through practical business advice and tax planning.
Our approach starts by understanding what you are trying to achieve:
Consult: We take the time to understand your goals, challenges and opportunities.
Recommend: You receive clear, actionable strategies designed around sustainable growth.
Implement: We work with you to put the agreed plan into action and monitor it over time.
If you are considering a family trust, the first step is understanding whether it makes sense within your broader business and tax strategy.
Frequently Asked Questions
An accountant can provide valuable advice before and during the setup process, particularly around tax and business structuring. Legal advice may also be required for the trust deed and other legal aspects of establishing the trust.
Legal expertise may be needed because the trust deed is a legal document that governs how the trust operates. Your accountant can work alongside appropriate legal advisers so the legal structure and tax strategy are considered together.
The cost can vary depending on the structure, whether a corporate trustee is used, the legal work required and the professional advice involved. Ask for a clear breakdown of establishment and ongoing costs before proceeding.
Timing depends on the complexity of the structure, preparation of the trust deed, execution of documents and any registrations required. If you already operate through other entities, additional planning may be needed before the trust is established.
A trust can form part of a business ownership structure, including holding business interests. The right arrangement depends on your business, tax position and objectives, so the structure should be reviewed with appropriate accounting and legal advice before changes are made.
