Last Updated on 20/08/2025 by Damin Murdock
Establishing a family trust with a corporate trustee is a popular strategy among Australian families and entrepreneurs looking to protect their assets and manage taxation efficiently. But how exactly does a corporate trustee enhance the structure of a family trust? This article explores the tax and asset protection benefits of appointing a corporate trustee to your family trust under Australian law.
What Is a Corporate Trustee?
A corporate trustee is a company appointed to manage a trust’s assets and obligations. In the case of a family trust, the corporate trustee acts on behalf of the trust and its beneficiaries, holding legal title to the trust assets while distributing income and managing liabilities according to the trust deed.
Tax Benefits of Using a Corporate Trustee
- Income Distribution Flexibility
A major tax advantage of family trusts lies in their ability to distribute income among family members and entities within a designated family group. The trustee may allocate income to beneficiaries in a tax-effective way, reducing the overall tax burden on the family group. Corporate trustees can distribute income to family companies as beneficiaries, thereby benefiting from lower company tax rates when appropriate.
- Long-Term Tax Planning
Corporate trustees support structured asset accumulation and long-term family tax planning. The legal and financial separation between trust and individual assets, can assist in the ability to manage tax obligations with more control and foresight.
Asset Protection Benefits
- Separation of Ownership
The corporate trustee holds legal ownership of trust property, while the beneficiaries retain beneficial ownership. This separation offers a key layer of asset protection. For example, if a beneficiary is pursued by creditors, the assets held in the trust are generally protected.
- Limited Liability
A corporate trustee, being a company, offers limited liability. This means that in the event of litigation or debt collection, personal liability is typically restricted to the company’s assets, protecting directors’ and beneficiaries’ personal finances. This distinction is especially valuable in complex or high-risk business arrangements.
- Trustee Indemnity from Trust Assets
A corporate trustee is usually entitled to indemnity from trust assets for any liabilities incurred while properly administering the trust. However, this indemnity often only applies to lawful and responsible actions within the trustee’s duties.
Key Considerations Before You Decide
While corporate trustees offer numerous advantages, they also come with responsibilities:
- Ongoing Compliance: The company acting as trustee must meet ASIC reporting obligations and maintain separate records from the trust.
- Costs: Establishing and maintaining a corporate trustee involves setup costs, ASIC fees, and ongoing administrative expenses.
- Risk of Improper Use: If the company doesn’t observe a clear separation between personal and trust assets, asset protection can be undermined.
- Succession Planning: Corporate trustees offer perpetual succession, simplifying long-term estate planning and asset continuity across generations.
Conclusion
Using a corporate trustee with a family trust provides advantages and strong asset protection, two key pillars for building and preserving family wealth in Australia. However, the structure is complex and requires diligent administration and legal compliance. You should seek independent advice from your accountant or a tax expert for taxation advice and other detailed tax implications.
If you’re considering setting up a family trust or transitioning to a corporate trustee structure, feel free to contact Damin Murdock at Leo Lawyers via our website, on (02) 8201 0051 or at office@leolawyers.com.au. Further, if you liked this article, please subscribe to our newsletter via our Website, and subscribe to our YouTube , LinkedIn, Facebook and Instagram. If you liked this article or video, please also give us a favourable Google Review.
DISCLAIMER: This is not legal advice and is general information only. You should not rely upon the information contained in this article and if you require specific legal advice, please contact us.
Damin Murdock (J.D | LL.M | BACS - Finance) is a seasoned commercial lawyer with over 17 years of experience, recognised as a trusted legal advisor and courtroom advocate who has built a formidable reputation for delivering strategic legal solutions across corporate, commercial, construction, and technology law. He has held senior leadership positions, including director of a national Australian law firm, principal lawyer of MurdockCheng Legal Practice, and Chief Legal Officer of Lawpath, Australia's largest legal technology platform. Throughout his career, Damin has personally advised more than 2,000 startups and SMEs, earning over 300 five-star reviews from satisfied clients who value his clear communication, commercial pragmatism, and in-depth legal knowledge. As an established legal thought leader, he has hosted over 100 webinars and legal videos that have attracted tens of thousands of views, reinforcing his trusted authority in both legal and business communities."
