THE “FAMILY” TRUST: What is it and do you need one? 21 Aug 2016

What is a Family Trust?

A Trust is a structure through which assets are transferred from one person as owner (“the Settlor”) to others (“the Trustees”) for the benefit of third parties (“the Beneficiaries”). The Trustees legally own the assets (“Trust Fund”) and the Trust Deed tells the Trustees how the Trust Fund is to be dealt with.

What is the best structure?

The Courts have said that although a sole Settlor can also be the sole Trustee, he/she cannot be the sole Beneficiary (see our article on the Clayton case here). This is because there is then no legal split of asset ownership between Trustees as legal owners and Beneficiaries as equitable owners. A Settlor may also be a Trustee and a Beneficiary, but it is best practice he/she is joined by an independent Trustee (ie: non-family).

What are the benefits of using your Lawyer's Company as an Independent Trustee?

It is harder for others to claim that the Trust is a sham (not a real Trust) from the outset, because all Trustees (including the independent Trustee) must agree on actions taken.

There is a more professional and objective approach to the Trust’s Administration. This reduces bad decisions and risk by ensuring the following issues are addressed at regular Trustee meetings:

What are a Trust's possible benefits?

From an asset protection perspective it may offer protection from:

From a succession planning perspective:

Every situation is unique so please discuss your particular case with a professional advisor who can provide you with a tailored solution.

Pat Rotherham -