How to Establish a Trust in Australia

A Guide for Startup Businesses and Founders who want to know more about Trusts inside of Business.

I’ve worked with business owners who built strong businesses, and still lost money, assets, or control because they set up the wrong structure. If you're building for the long term, a trust can be one of the smartest ways to protect assets and lower your tax bill — if you set it up properly.

If you're serious about protecting what you're building, you need to understand how trusts work and why structure matters. This guide walks you through the process step by step — so you don’t waste time, expose your assets, or pay more tax than necessary.

A trust is a structure that separates ownership from control. Once established, a trust can provide a layer of protection where other structures cannot.

In 2019, a family-run construction company in NSW faced a major liability claim worth hundreds of thousands. Because they had set up a discretionary trust with the right structure, their family home and savings were protected. The business took the hit — not their personal assets. They survived the claim, kept trading, and moved forward. That’s the power of getting structure right the first time.

Let’s look at how to set up a trust in Australia, step by step.

A trust can provide a layer of protection where other structures cannot.

What Is a Trust?

A trust is a legal structure where a trustee holds and manages assets on behalf of beneficiaries. It’s not a separate legal entity like a company —, it’s a relationship governed by a legal agreement called a trust deed.

There are different types of trusts, but the two most common for Australian businesses are:

• Discretionary Trusts (also known as family trusts) — the trustee decides how income is distributed

  
  

• Unit Trusts — income is distributed according to fixed units held by beneficiaries

A trust can be used to:

• Run a business

• Hold investments

• Own property

• Minimise tax

• Protect assets

TRUST V COMPANY MATRIX

Aspect	Discretionary / Family Trust	Company (Pty Ltd)	Best Use / Notes
Legal status	Not a separate legal entity (relationship via trust deed). Trustee holds assets for beneficiaries.	Separate legal entity under the Corporations Act.	Trust relies on trustee; company stands on its own.
Ownership	Beneficiaries hold equitable interests (discretionary or fixed via units).	Shareholders own shares.	Companies are clearer for equity splits.
Liability	Trustee is liable; corporate trustee limits personal risk (still director duties).	Limited liability for shareholders; directors can be liable for breaches/guarantees.	Corporate trustee strongly recommended.
Asset protection	Strong when properly structured (separation of control/benefit).	Limited liability protects owners; business assets sit in the company.	Trusts popular for family asset protection.
ABN/GST	ABN/TFN for the trust (trustee applies); register GST if required.	ABN/TFN for company; register GST if required.	Either structure can operate a business.
Compliance	Trust deed, annual distribution resolutions, trust tax return, beneficiary statements.	ASIC annual review/fees, company tax return, director duties, records.	Company has more formal corporate compliance.
Succession	Via deed provisions & appointor powers; change trustee if needed	Via share transfers and board changes.	Consider long-term exit/estate planning.
Raising capital	Harder (no shares; units possible but clunky for startups).	Easier (issue shares, ESOP, investor-friendly).	Companies are the norm for venture funding.

Why Establishing a Trust Matters

Most founders focus on building their product, chasing growth, and landing clients. But here’s the hard truth: if you ignore structure, all that effort can be wiped out in a single legal claim, tax bill, or partnership dispute. This is why it is important to research if establishing a trust could prove to be a valuable option.

A trust gives you:

• Protection – Separates personal wealth from business risk so your home, savings, and family stay safe.

  
  

• Flexibility – Lets you distribute income in a way that’s tax-effective and supports your growth.

  
  

• Credibility – Shows investors, banks, and partners that you’re serious about long-term structure.

  
  

• Continuity – Makes succession and ownership transitions smoother when your business scales.

You’re not just setting up a business. You’re building a future. A trust is a legal foundation that protects everything you’re working so hard to create.

Before You Start

Before you rush into setting up a trust, get your foundations in order. Too many founders skip this prep and end up redoing paperwork, paying extra fees, or worse — creating a structure that doesn’t actually protect them.

Here’s what you should have ready:

• Your business goals – Are you protecting family assets, setting up for tax planning, or running a long-term venture?

  
  

• Clarity on beneficiaries – Who should benefit from the trust (family members, partners, investors)?

  
  

• Decision on trustee type – Individual or corporate trustee (most business owners choose corporate for protection).

  
  

• A professional adviser – A lawyer or accountant who can draft a deed that fits your goals (not a generic template).

  
  

• Initial settlement sum – A nominal amount (often $10) from a settlor who isn’t part of the trust.

  
  

• Domain knowledge – Basic understanding of ABN/TFN registrations and why they matter.

Mentor Tip: Doing this prep first saves you from expensive rewinds later. Think of it as setting the ground before you pour the foundation.

How to Set Up a Trust in Australia (Step-by-Step)

Here’s the process of how a trust is established in Australia — clearly, legally, and without mistakes that cost you later.

1. Choose the type of trust you need

Decide whether you need a discretionary trust (flexibility in distributing income) or a unit trust (fixed shares of income). The right choice depends on your goals, partners, and tax planning strategy.

If you’re running a family business or want flexibility in how income is shared, a discretionary trust is usually the go-to.

Choosing the wrong type upfront can limit your options and increase compliance costs later.

2. Appoint the trustee

You need to nominate a trustee — the person or company responsible for managing the trust.

• A trustee can be an individual or a company

• A corporate trustee offers more structure and continuity

• The trustee has control but must act in beneficiaries’ best interests

Many business owners use a company as trustee for extra protection and easier succession planning.

Getting the right trustee structure is key — they carry legal responsibility for the trust.

3. Draft the trust deed

The trust deed is the legal document that outlines the terms and rules of the trust.

• Get it professionally drafted by a lawyer or qualified accountant

• Include details like: the trustee, beneficiaries, powers, rules for income distribution, and how to wind up the trust

• Avoid generic templates — they often don’t meet ATO or legal standards

The deed document controls everything — it’s worth getting it right from the start.

A weak or outdated deed can cause disputes, tax issues, and audits. Don’t skimp here.

4. Settle the trust

To legally activate the trust, a settlor (usually a lawyer or accountant not involved in the trust) must contribute a nominal amount (e.g. $10).

• The settlor signs the deed and pays the settlement sum

• This step makes the trust legally valid

• The settlor can’t benefit from the trust

This is a formality, but it’s essential — don’t skip it.

Once the trust is settled, you’re ready to register it properly.

5. Apply for an ABN and TFN for the trust

If the trust will run a business or earn income, it must have its own ABN and Tax File Number.

• Apply through the Australian Business Register: abr.gov.au

• Make sure the trustee applies on behalf of the trust

• You’ll also need to register for GST if turnover will exceed $75,000

Use the trust’s full legal name and details that match the trust deed.

This step connects your trust to the ATO and enables proper reporting.

6. Open a bank account in the trust’s name

Set up a separate business bank account for the trust to manage income and expenses.

• Use the trust deed, ABN, and trustee details to open the account

• All income and payments should go through this account

• Don’t mix personal or unrelated business funds

Keep trust money separate — this is critical for legal protection and clean financials.

Banking in the wrong name or mixing funds can invalidate your trust in court.

Common Mistakes (and How to Avoid Them)

Let’s keep it sharp — these are the trust mistakes we see way too often:

Setting up a trust without legal advice → You’ll likely get the structure wrong, and fixing it later is expensive.

Using yourself as trustee without a company → That exposes your personal assets in the event of a claim.

Using a generic trust deed from the internet → These are often out of date or non-compliant with ATO rules.

Failing to apply for a separate ABN and TFN → You’ll confuse your records and trigger ATO penalties.

Not keeping records or treating the trust like a personal bank account → That can break the legal separation and expose you to risk.

A trust done properly is a powerful structure. A trust done wrong is just paperwork with no protection.

What to Do Right Now

✅ Talk to your accountant or lawyer about the right trust structure Seek advice and avoid trouble by doing this with professional advice.

✅ Download the Complete Comparison Matrix from ProDesk Designed for founders and startups from structure to marketing to setup [ProDesk.com].

✅ Book a session with Noize For business owners ready to protect their assets and structure their business for long-term growth [Noze.com.au]

✅ Get the Full StartUp Deck Helping you set up the foundations of your startup in over 11 areas of business. [theStartUpDeck.com]

The Bottom Line

A trust isn’t just paperwork — it’s one of the strongest tools you have to protect what you’re building. Done right, it shields your family home, streamlines your tax, and sets up your business for long-term stability. Done wrong, it’s just false security.

If you’re serious about growth and protecting your assets, don’t cut corners. Get the right advice, choose the right structure, and setup your trust properly from the start.

It’s not just smart business — it’s peace of mind for everything you’re working so hard to build.

Frequently Asked Questions (FAQs)

How do I register a trust in Australia?

To register a trust in Australia, you’ll need to:

1. Choose the type of trust (discretionary or unit trust)

2. Appoint a trustee (individual or corporate)

3. Have a trust deed professionally drafted

4. Settle the trust with a nominal sum from a settlor

5. Apply for an ABN and TFN in the name of the trust

6. Open a dedicated bank account for trust transactions

While there’s no central “trust registry” like for companies, your trust becomes legally valid once the deed is signed, settled, and tax registrations are complete. Professional legal or accounting advice is strongly recommended to avoid compliance risks.

Do I need an ABN and TFN for my trust?

Yes — if your trust will operate a business, earn income, or incur expenses, it must have its own ABN (Australian Business Number) and TFN (Tax File Number). These are used for tax reporting and compliance with the ATO. Apply through abr.gov.au using the trust’s legal name and trustee details.

What’s the difference between a discretionary trust and a unit trust?

• Discretionary Trust: The trustee decides how income is distributed among beneficiaries. Ideal for family businesses or when flexibility is needed.

• Unit Trust: Income is distributed based on fixed units owned by beneficiaries. Best for joint ventures or structured investments where entitlements must be proportional.

Can I establish a trust myself in Australia?

Technically, yes — but it's not recommended. Trust deeds are complex legal documents that must align with tax laws, beneficiary rights, and your business objectives. DIY setups often result in invalid trusts or future legal trouble. Always consult a lawyer or accountant experienced in trust structuring.

What are the tax benefits of a discretionary trust?

A properly managed discretionary trust can legally distribute income across beneficiaries, potentially lowering the overall tax paid. This is called income streaming, and it must follow ATO rules and be supported by your trust deed. It’s a powerful strategy for family-owned businesses.

Can a trust own a business?

Yes — many Australian businesses operate under a trust structure. The trust holds the business assets and enters contracts through the trustee (often a company). This structure can provide both asset protection and tax flexibility, especially for growing or family-run businesses.