What is a trust?
A ‘trust’ is a legal arrangement where a person or organisation (the trustee) is appointed to hold money or property on behalf of other people (the beneficiaries).
The rules of the trust may be outlined in a trust deed or in a person’s Will depending on the type of trust. Setting up trusts and the administration of trusts can be complicated. It is important to choose the right options in establishing a trust to meet your goals and needs.
If you decide to establish a trust, it is important to consider seeking legal and financial advice to ascertain the most suitable trust for your circumstances and ensure all the necessary elements of the trust are covered properly in the documentation.
A trust set up during your lifetime is called an inter-vivos trust, which is also sometimes referred to as a living trust.
Inter-vivos trusts distribute property or assets to the beneficiary during or after the lifetime of the person setting up the trust. The length of the trust is established when the trust is set up.
A trust written as part of a Will that will take effect upon the death of the person setting up the trust is called a testamentary trust. If a Will has a trust within it or establishes a trust, once the executor has completed their duties, the role of the trustee begins. Often the executor is also the named trustee.
The trustee becomes responsible for any assets held in the trust and will manage those assets according to the terms of the trust. These trusts can be set up for one or more beneficiaries and for a set period.
There are many different types of trusts, which can be established for a variety of purposes or situations.
Common examples of why trusts are established include:
- preserving and protecting assets
- tax planning purposes
- providing for children or a person with impaired decision-making capacity
- giving to charitable causes
- business purposes
- operating and managing a self-managed superannuation fund.
A solicitor can help you with trust matters such as:
- advising you on whether a trust is suitable and the type of trust that will meet your goals and needs
- explaining how trusts work and how one can be set up
- drafting the trust deed and any associated documents
- collaborating with your accountant or financial advisor.
If you don’t already have a solicitor, you can find a solicitor at the Queensland Law Society website.
The role of a Trustee
A trustee is the person or entity responsible for administering the trust. The trustee can be one or more individuals, a company (called a corporate trustee) or a trustee organisation such as Queensland Public Trustee.
A trustee must understand and act in accordance with the terms of the trust. The terms of the trust may be set out in a trust deed, or they may be contained within the terms of a Will if it is a testamentary trust. A trustee has obligations to avoid breaches of their duties and responsibilities as a trustee. The trustee is liable to the beneficiaries for any loss resulting from any breach caused by the trustee. Also the trustee must not allow their own personal interests to conflict with the interests of the beneficiary.
The responsibilities of the trustee are to:
- ensure the property or assets are protected throughout the trust lifetime
- provide adequate information to the beneficiaries about trust records
- act honestly and in the best interests of the beneficiaries.
The trustee manages all financial matters relating to the trust including:
- paying any taxes or other liabilities
- keeping adequate records
- seeking advice on any investments
General information about the types of trusts available
There are many different types of trusts operating in Australia. Some of the more common types of trusts include:
- fixed
- unit
- testamentary
- discretionary
- charitable
- superannuation.
Choosing which type of trust is right for you depends on your goals and the particular circumstances surrounding why you think a trust is needed.
Queensland Public Trustee and trusts
Queensland Public Trustee can act as trustee for a number of different types of trusts because of its public purpose.
Our work is mostly in the areas of:
- trusts for children and people with impaired capacity
- testamentary trusts
- charitable trusts.
When you make a Will with Queensland Public Trustee, we can provide you with information about the various trusts you may create through your Will. You can then decide if these trusts meet your needs and goals.
Queensland Public Trustee can at times act as a trustee for an established trust.
You can contact us on 1300 360 044 to discuss options that may be available and whether Queensland Public Trustee would consider acting as trustee.
Find out more about Queensland Public Trustee services
Frequently asked questions about trusts
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A trust exists where there is an obligation on a persons or entity (the trustee) as owner of some property (the trust property) to deal with that property for the benefit of another person or entity (the beneficiary). Basically, a trust is an arrangement under which a person or organisation holds property or assets for the benefit of others.
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A trustee is the person or entity responsible for administering the trust.
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The trustee can be one or more individuals, a company (called a corporate trustee) or a trustee organisation such as Queensland Public Trustee.
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The responsibility of a trustee can be ongoing, complex and onerous. If you are a trustee, you can contact us to talk about whether we would consider taking over the administration of the trust. For more information, contact us on 1300 360 044.
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In Queensland, a trust can operate for a period up to 80 years. The duration of the trust is generally set out in the terms of the trust and may end based on a specific event occurring. The life of a charitable trust can extend beyond 80 years and can exist while there is capital and income within the trust.
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The reasons for setting up a trust are many and varied. Some common examples of why trusts are established include:
- Preserving and protecting assets
- Tax planning
- Providing for children or a person with impaired decision-making capacity
- Charitable causes
- Business purposes
- Operating and managing a self-managed superannuation fund.
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The beneficiary can be a person or company for whose benefit the trust is created.