How to Set Up a Trust to Protect Your Assets in Australia

Setting up a trust is one of the most effective ways to protect your personal or business assets from legal, financial, or family-related risks. In Australia, trusts are widely used to separate ownership, manage wealth, and provide long-term security for families and business structures. However, to ensure the trust provides the protection you seek, it must be properly set up and managed.

With decades of combined experience and a collaborative, outcome-driven approach, Origin Business Consultants will help you understand the essentials of trust structures—so you can make informed decisions with clarity and confidence.

Understanding Trusts and Why They Protect Assets

What Is a Trust?

A trust is a legal relationship where a trustee holds and manages assets on behalf of one or more beneficiaries. Rather than owning the assets personally, the trustee holds them according to the rules set out in a legal document called a trust deed.

In Australia, trusts are commonly used in business, estate planning, and investment to provide control, protection, and flexibility. The key parties include:

• Settlor – establishes the trust
• Trustee – legally responsible for managing the assets
• Beneficiaries – individuals or entities who benefit from the trust

By separating legal ownership (held by the trustee) from beneficial ownership (held by the beneficiaries), trusts create a protective structure that shields assets from direct claims.

Why Trusts Are Used for Asset Protection

Trusts are often used as a tool to protect personal and business assets from financial risk. When properly structured, they offer protection from:

• Creditors – If a beneficiary or business owner is sued or faces insolvency, trust-held assets may not be accessible.
• Legal claims – Individuals with high-risk professions or liabilities can keep their personal wealth separate.
• Family law disputes – Trusts can, in some cases, reduce exposure to family provision claims or property settlements.

For business owners, trusts offer the added benefit of controlling income distribution while keeping core assets out of personal ownership.

When a Trust May Not Protect Your Assets

While trusts are effective when set up correctly, they are not immune to challenges. You may lose the intended protection if:

• You act as both the sole trustee and sole beneficiary, blurring separation.
• The trust deed is poorly drafted or unclear.
• You personally guarantee a loan or obligation that overrides the trust’s protection.
• The trust is considered a sham or used deliberately to avoid creditors.

This highlights the importance of getting expert support from accounting and legal professionals. At Origin, we work alongside Indigenous legal specialists to ensure your trust is structured and compliant from day one.

Choosing the Right Trust Structure

Common Types of Trusts in Australia

There’s no one-size-fits-all approach to trusts. The structure depends on your goals, circumstances, and beneficiaries. Common trust types include:

• Discretionary (Family) Trust – trustee discretion over income and capital distributions. Ideal for family wealth, tax flexibility, and asset protection.
• Unit Trust – Beneficiaries have fixed entitlements, suitable for business partnerships or joint investments.
• Hybrid Trust – Combines discretionary and fixed features, offering flexibility with some certainty.
• Testamentary Trust – Created through a valid will, activated upon death, offering strong protection and tax advantages.

Which Trust Is Right for You?

Selecting the right trust structure depends on:

• Risk exposure you wish to minimise
• Protection of family wealth
• Succession and intergenerational planning
• Holding income-generating assets

Each trust type has distinct legal, tax, and administrative implications. Misalignment can lead to missed opportunities or unnecessary exposure.

Get Expert Help Choosing

At Origin Business Consultants, we understand your unique objectives to recommend the optimal trust structure. We collaborate with legal experts to ensure compliance and alignment with your broader estate, tax, and business planning strategies.

Step-by-Step Guide to Setting Up a Trust

Setting up a trust involves specific, crucial steps:

Step 1 – Define the Trust’s Purpose

Clarify your objectives: asset protection, tax strategies, estate planning, or business continuity. This defines the necessary trust structure and deed details.

Step 2 – Appoint the Right Trustee

The trustee manages assets in beneficiaries’ best interests. Options include:

• Individual trustee – typically family members.
• Corporate trustee – often preferred for stronger asset protection due to clear asset separation.

Step 3 – Draft and Execute the Trust Deed

The trust deed sets out:

• Trustee powers and responsibilities
• Beneficiary details
• Income and capital distribution rules

Origin works with Indigenous legal firms like Anaiwan Advisory and Black Ink Legal to ensure strong documentation.

Step 4 – Settle the Trust and Open a Bank Account

The trust must be legally established by:

• Settling with a nominal sum by the settlor
• Opening a dedicated trust bank account

Step 5 – Register with the ATO

If the trust generates income or business operations, register:

• Tax File Number (TFN)
• Australian Business Number (ABN)
• GST registration, if applicable

Step 6 – Administer the Trust Properly

Maintain compliance through:

• Accurate record-keeping and annual tax returns
• Distributions following trust deed terms
• Clear separation of trust and personal funds

Common Mistakes, Benefits, and Next Steps

Avoid These Common Mistakes

Common trust errors include appointing inappropriate trustees, poorly drafted deeds, mixing assets, and neglecting regular reviews.

Key Benefits of Using a Trust

A properly established trust:

• Protects against legal and financial claims
• Manages intergenerational wealth distribution
• Provides tax efficiency
• Supports comprehensive estate planning

How Origin Business Consultants Can Help

Origin simplifies trust setup with comprehensive support, legal collaboration, integrated strategic planning, and culturally-aware, outcome-driven services.

Get Clarity and Confidence Around Asset Protection

Establishing a trust correctly safeguards your future. Origin ensures you get it right, protecting your assets effectively.

Learn more about our Trust Establishment service

Disclaimer: This article provides general information only and does not constitute legal or financial advice. Always seek professional advice relevant to your specific circumstances.