Establishing a family trust is a popular legal structure in Australia for protecting assets, managing succession, and optimising tax outcomes. But a recurring question for individuals and small business owners is: Can you legally set up a family trust yourself?
Under Australian law, the answer is technically yes—but the risks, legal implications, and long-term responsibilities involved make professional legal advice not just advisable, but critical.
Legal Steps to Set Up a Family Trust in Australia
The legal foundation of any family trust lies in properly executing its core elements. The following steps must be taken to establish a valid trust under Australian trust law:
Step 1: Nominate the Trustee and Appointor
The trustee is the legal entity responsible for managing the trust's assets. This can be an individual or a corporate trustee. Equally important is the appointor, who holds the power to appoint or remove the trustee—effectively retaining ultimate control over the trust. These roles must be clearly identified in the trust deed.
Step 2: Identify Beneficiaries
The beneficiaries may include individuals, companies, or charitable entities within a defined family group. In a discretionary trust, the trustee has flexibility in deciding how much each beneficiary receives.
Step 3: Draft and Execute a Legally Sound Trust Deed
The trust deed is the central legal instrument of the trust. It outlines the trustee's powers, distribution mechanisms, termination clauses, and beneficiary classes. A nominal sum, often $10, is settled by a settlor (an independent third party) to bring the trust into legal existence.
Step 4: Comply with State Revenue Requirements
In jurisdictions such as New South Wales, the deed must be stamped within 3 months, and stamp duty of $500 applies. Failure to meet these deadlines may render the trust non-compliant or voidable.
Step 5: Apply for a TFN and ABN
The trust must obtain a Tax File Number (TFN) from the ATO and, if operating a business, an Australian Business Number (ABN). These are mandatory for taxation and reporting purposes.
Step 6: Transfer Assets into the Trust
Legal ownership of any property, shares, or cash must be formally transferred into the trustee’s name as trustee for the trust. This may trigger capital gains tax, duty, or compliance obligations, depending on the asset class and jurisdiction. Additionally, trust variations may arise even after self-setup, requiring amendments to the deed or updated legal documentation to reflect changes in beneficiaries, trustees, or distribution rules.
Is It Legally Safe to Set Up a Trust Without a Lawyer?
It is legally permissible to establish a family trust without engaging a solicitor. However, Australian courts frequently encounter disputes and litigation arising from poorly drafted trust deeds, invalid asset transfers, or breaches of trustee obligations—often stemming from do-it-yourself (DIY) trust setups. For this reason, finding a good family lawyer is often the most practical step you can take to ensure the trust is valid, enforceable, and aligned with your long-term objectives.
Legal Risks of DIY Trust Setup Include:
- Trust deed clauses that do not comply with Australian law or tax regulations.
- Absence of an appointor clause, leading to loss of control.
- Failing to properly constitute the trust (i.e. no valid settlement or stamping).
- Exposure to tax penalties due to unreported income or invalid distributions.
- Inability to enforce the trust in court due to vagueness or ambiguity.
Legal practitioners who specialise in trust law ensure that the structure, deed, and asset protection mechanisms are valid and effective. They also tailor the trust to your family’s specific objectives—whether for succession planning, tax efficiency, or creditor protection.
Cost vs Value: Why Legal Expertise Matters
A professionally drafted discretionary family trust typically costs $1,500 to $2,500, including legal consultation and documentation. While free templates may seem appealing, they cannot account for individual circumstances or comply with each state’s legal requirements.
Moreover, professional legal advice provides:
- Robust asset protection mechanisms
- Proper role allocation (e.g. multiple appointors, alternate trustees)
- Clear instructions on distribution and vesting
- Ongoing legal and tax compliance guidance
Ongoing Legal Obligations of a Trustee
After the trust is established, the trustee assumes continuing legal responsibilities, including:
- Lodging annual trust income tax returns
- Preparing distribution resolutions in accordance with the trust deed
- Keeping accurate records, minutes, and accounts
- Acting in accordance with fiduciary duties under equitable and statutory law
Failure to comply can result in:
- Personal liability for trustees
- Disqualification from tax concessions
- Resettlement of the trust (with adverse tax implications)
The complexity of ongoing management further supports the need for a qualified legal adviser—not only at setup, but across the trust’s lifespan.
FAQs: Can You Set Up a Family Trust Yourself?
Before proceeding with a DIY trust or engaging professional help, it’s important to understand the most common legal questions Australians ask about setting up a family trust. The following FAQs address crucial legal, tax, and procedural concerns—helping clarify what’s involved and what to avoid.
Can I legally set up a family trust without using a solicitor?
Yes, but legal risks are significant. A poorly structured trust can lead to unenforceability, tax penalties, or litigation. Legal advice ensures compliance.
What are the types of family trusts in Australia?
The most common is a discretionary trust, where trustees decide distributions. Others include unit trusts, hybrid trusts, and testamentary trusts.
Are there tax implications when setting up a trust?
Yes. Trust income distributed to beneficiaries may receive favourable tax treatment, but improper structuring or non-distribution may trigger high tax rates.
What’s the difference between a lawyer-drafted trust and a DIY trust?
Lawyer-drafted trusts are customised, compliant, and risk-mitigated. DIY trusts often lack essential clauses and carry high risk of legal failure.
How long does it take to set up a trust in Australia?
With professional assistance, 3–7 business days. DIY setups may take longer and require additional time for corrections or legal review.
Can I update the trust deed later?
Yes, via a Deed of Variation—but only if allowed under the original deed and with legal guidance to avoid a resettlement event. Variations are often needed when trustees change, or when family circumstances evolve, making legal oversight essential to keep the trust valid and enforceable.
Final Takeaway: Legal Setup Is a Long-Term Investment
Setting up a family trust yourself is legally possible but ill-advised for most Australians. Trusts are complex legal entities with far-reaching financial, tax, and succession implications. A professionally established trust ensures compliance, asset protection, and long-term legal certainty.
For tailored legal assistance, connect with a qualified Australian trust lawyer through LegalFinda. Ensure your family trust is structured right—from day one.
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