Like most items surrounding tax and legal structures the setups, trusts can complicated, and misunderstood.

I strongly recommend legal, tax and accounting advice when it comes to creating the trust that is right for you and your circumstances.

The first thing you need to remember is that a Trust is NOT a separate legal entity (unlike, say, a Pty Ltd Company). And a Trust isn’t YOU either (e.g. unlike a Sole Trader orPartnership structure).

Basically, a trust is a LEGAL RELATIONSHIP between one person and another person (or persons). The first person is called “the Trustee”, while the second person is called “the Beneficiary” (or “Beneficiaries” if there are more than one). The Trust is set up by a person called “the Settlor”.

Don’t you just love legal terms!

So, the TRUSTEE holds and deals with property (eg. this could be assets, income, etc) in a certain way for the benefit of the BENEFICIARIES. Think of the Trustee as a “middleman” in this equation.

The benefits and pitfalls of trusts – a very simplified version



Generally speaking (and without looking at any SPECIFIC types of Trust), the advantages tend to be:



Not surprisingly, there are also many disadvantages in using a Trust for your business structure:


There is a lot written on this subject, but this is a great article

So trusts can be a great vehicle for asset protection and income and asset distribution. They do come with complication, so as I have mentioned don’t just read a few lines and decide this is right for you.

Get the right legal, tax and accounting advice before proceeding.