A ‘family’ trust is a usually set up as a discretionary trust where, like other trusts, the assets are owned by trustees for the benefit of the beneficiaries.  When setting up a trust for the benefit of family members, there is no requirement to use the words ‘family trust’ or indeed include the family’s ‘name’ in the trust’s title.  However, for the purposes of the information below we are going to use the phrase ‘family trust’ to describe the purpose of a trust set up for the benefit of family members.

Purpose

A family trust can be used to protect assets from creditors, ensure children receive their inheritances, and manage the risk of estate claims. 

Structure

A family trust involves a settlor (the person, people or company that creates the trust), trustees (the people who manage the trust), and beneficiaries (the people who benefit from the trust). 

Trust deed

A trust deed is a legal document that outlines the rules for a trust, including who the beneficiaries and trustees are, how the trust operates, the assets of the trust, and the powers and duties of the trustees.  It is essentially a contract that governs the trust. 

Duration

The Trusts Act of 2019 extended the maximum duration of trusts from 80 to 125 years. However, the terms of the trust deed may determine whether older trusts can be extended. 

Number of trustees

The law doesn't specify a minimum number of trustees, but it's usually at least two. 

‘Family’ trusts are often used to hold assets like farms and businesses that benefit multiple generations and remain in the family for a long time. They are also used by people who want to keep separate property separate from relationship property.

As noted above, ‘family’ trusts are most commonly set up as ‘discretionary’ trusts although they can also be set up as ‘fixed’ trusts. Where people with FASD and other disabled people are a beneficiary of the trust, setting up a discretionary trust is recommended because fixed payments could create issues with benefit payments.