Family Trust Accounting

Also known as a discretionary trust, a family trust is established to hold a family’s assets or to conduct a family business. Typically, a family trust is beneficial for asset protection or tax purposes.

A family trust account includes:

• Trustee(s)
• Appointor
• Beneficiaries
• Settlor

Assets a trustee holds in their family trust may include income, property, shares, cryptocurrency, businesses and business premises.

Yes, an accountant can help you to set up a family trust. When you set up a family trust, you require a settlor to create the trust deed, which is a legally binding document that defines the rules that govern the trust. It outlines the trustee(s) and beneficiaries, the powers the trustee holds, how benefits are paid, rules for managing the trust bank account and how the trust may be terminated. 

The settlor is an independent person unrelated to the beneficiaries who has sufficient financial or legal knowledge of the family trust set up process and management, such as an accountant or lawyer. 

A lawyer is also required for deed stamping in the state or territory you establish your trust. At POP Business, we work closely with law firms that specialise in trust establishments, allowing us to streamline the deed stamping process.

Family trusts are not legal entities and cannot directly own property or assets. 

The assets held in the trust are legally owned by the trustee or trustees and are held in the trust on behalf of the beneficiaries. The trustee is legally responsible to any creditors of the trust. 

For example you can purchase a house through a trust, and it would be legally owned by the trustee on behalf of the beneficiary. The beneficiary could then live in the house, however they would not be able to claim any CGT or land tax exemptions as they are not the legal owners of the property. 

You should consult an accountant to determine the best course of action for managing your assets.

The exact cost to establish a family trust may depend on the state you live in and applicable stamp duty. For a family trust accounting service to set up your family trust, you will need to obtain the following and pay the associated costs. 

• The Family Trust Deed – this specifies the rules under which the trust operates
• Family Trust Deed Stamping – stamp duty varies between states
• A Family Trust TFN – Tax File Number
• A Family Trust ABN – Australian Business Number (required if operating as a business)

Stamp duty for family trust deeds can vary state-to-state from $0 to up to $500 in NSW.

Our service fee for creating a family trust is $990 including GST. This is separate to the deed stamping costs of the state or territory you establish your trust in, as well as any associated lawyers fees for deed stamping.

Along with safeguarding your personal and business assets, when you have a family trust, you may benefit from: 

• Controlling how much income or capital to pass on to each beneficiary.
• Favourable tax planning opportunities where more money can be distributed to the beneficiary with the lowest marginal tax rate.
• Flexibility to distribute income to adult children (aged over 18 years) who are either studying or working part-time and are in a low tax bracket.
• Stream capital gains and franked dividends to specific beneficiaries.
• A family trust can benefit from a capital gains discount when disposing of assets held for more than 12 months.
• Ability to hold personal use assets such as holiday homes, boats, racehorses, etc.
• Reduces the land tax payable on multiple properties by owning each property in a separate family trust.
• Assets can stay in the family and be passed through the family.