There are seven key steps when it comes to setting up a family
trust in Australia and done right, it’s a fairly simple process.
1. CHOOSE A TRUSTEE AND BENEFICIARIES
First of all, obviously, you need to choose a trustee and decide
on the beneficiaries of the fund.
Given that the trustee is the legal person or entity responsible
for administering the trust in line with the trust deed, it's an important
2. CREATE A TRUST DEED
You’ve assigned your trustee and decided on the beneficiaries, so
the next step is to create a deed of trust.
The trust deed is basically the terms and conditions of the family
It’s the legal agreement that sets out how the family trust will
operate and how the trustee will need to administer the family trust.
Given each trust deed needs to be created according to the
financial goals of your family trust, it’s best to get financial advice at this
3. SETTLE THE TRUST DEED
The trust deed then needs to be signed by a settlor (the settlor can’t
be related to the beneficiaries of the trust).
The settlor will then sign the trust deed and give an initial
settlement sum to the trustee.
4. HOLD A TRUSTEE MEETING
Once the family trust deed has been settled, the trustees and
beneficiaries should have a meeting to formally accept their roles in the trust
and agree to be bound by the terms and conditions of the deed.
5. LODGE A TRUST DEED AND PAY STAMP DUTY
The trust deed needs to be lodged for assessment with the revenue
office in the state or territory where the trust was created.
Trust deeds in some states also incur a stamp duty, which needs to
be paid by a set date.
For example, in NSW there is a $500 stamp duty fee that needs to
be paid within three months for each new discretionary trust.
In Victoria, the stamp duty fee is $200, due within 30 days, in
the Northern Territory and Tasmania the fee is $20, due within 60 days and 3
6. APPLY FOR AN ABN AND TFN
The next step is for the trust to apply for an Australian business
number (ABN) and a tax file number (TFN).
An ABN registration usually happens instantly while a TFN can take
up to 28 days - both can be completed online.
7. OPEN A TRUST BANK ACCOUNT
The final step in setting up a family trust is to open a bank
account in the name of the trustee.
Then the settlement sum can be deposited into the bank account, at
which point the family trust is then operational and other transactions,
deposits, or investments can occur.
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Tuesday, 20 June 2023