How To Start A Trust In Australia: Step-By-Step Guide

If you’re building a small business or startup, you’ve probably heard that a trust can be a smart way to hold business assets, run a family business, or manage investments.

But figuring out how to start a trust can feel confusing in practice. Who actually owns the assets? What is a trust deed? Do you need an ABN? Do you need a separate bank account? And what happens if you bring on investors or a co-founder later?

This guide breaks down how to start a trust in Australia in plain English, with a practical step-by-step process focused on what small businesses and startups typically need.

Keep in mind: the best structure depends on what you’re building (and who you’re building it with). The goal is to help you understand the moving parts so you can set things up correctly from day one.

What Is A Trust (And How Is It Different From A Company)?

A trust is not a separate legal entity in the same way a company is. Instead, a trust is a legal relationship where one person (or entity) holds assets for the benefit of others.

When you’re starting a trust in Australia, the main players are:

• Trustee: the person or company that legally owns and manages the trust assets (and signs contracts).
• Beneficiaries: the people or entities who can receive distributions (like income or capital) from the trust.
• Settlor: the person who “starts” the trust by contributing a small amount to establish it (often $10). In many setups, the settlor is someone who is not intended to benefit from the trust.
• Appointor (or Principal): the person who has the power to appoint or remove the trustee (this role can be crucial for control).
• Trust deed: the written legal document that sets out the rules of the trust.

By contrast, a company is its own legal entity, registered with ASIC, with directors and shareholders. If your trustee is a company (a common approach), that company can provide a useful layer of asset protection and clearer governance.

If you’re weighing up whether your business should operate via a trust, a company, or a mix (for example, a trust owning shares in a company), it helps to understand what registrations you’ll need from day one, including the TFN and ABN side of things (and when an ACN matters). The basics are outlined here: trust requirements.

When Does Forming A Trust Make Sense For A Small Business?

A trust isn’t automatically “better” than a company or sole trader setup. The right structure depends on your goals, risk profile, and growth plans.

That said, forming a trust is commonly considered when you want:

• Flexibility in distributions (for certain trust types), which can be relevant to how income is distributed between eligible beneficiaries (you should always get tailored tax advice from an accountant or registered tax adviser for your situation).
• Asset holding and separation, such as holding valuable IP or business assets separately from an operating business.
• Family business planning, where beneficiaries may include family members or related entities.
• Investment or property holding (including commercial property used by your operating business).

Common Types Of Trusts You’ll See In Business

There are several types of trusts, but these are common in small business contexts:

• Discretionary (family) trust: the trustee generally has discretion about which beneficiaries receive distributions (subject to the deed).
• Unit trust: beneficiaries hold “units” similar to shares, and distributions are usually proportionate to units held (common for joint ventures and unrelated investors).
• Bare trust: often used as a simple holding arrangement where the beneficiary is absolutely entitled to the asset (this can come up in property and SMSF contexts). If you’re considering this structure, it’s worth understanding the setup issues and documentation early: bare trusts.

If you’re a startup planning to raise capital soon, a trust structure can be workable in some cases, but it may be more complex for equity investment than a straightforward company structure. If investors will need clarity on ownership and decision-making, you may also need supporting agreements and/or a different structure.

How To Start A Trust In Australia: Step-By-Step

When people ask “how do I start a trust?”, what they usually mean is: how do I legally create the trust, get it ready to operate, and make sure it can open accounts and sign contracts?

Here’s a practical step-by-step process.

Step 1: Be Clear On Why You’re Setting Up A Trust

Before you draft anything, get clear on the purpose. For a small business, this might be:

• running your trading business through the trust (with the trustee signing customer and supplier contracts)
• holding IP (like software, branding, or content) and licensing it to an operating entity
• holding equipment or other valuable assets
• holding property used by the business

This matters because the “right” trust type and deed provisions will depend on how you’ll actually use the trust.

Step 2: Choose The Trust Type (Discretionary vs Unit Trust)

Your trust deed will work very differently depending on whether you choose a discretionary trust or a unit trust.

As a general guide:

• Discretionary trusts are common for family businesses and situations where flexibility of distributions is important.
• Unit trusts are commonly used where multiple parties (often unrelated) want fixed ownership proportions, like a joint venture.

If you’re bringing multiple founders or entities together, it’s also worth thinking ahead about decision-making and dispute pathways. Depending on your structure, you might need agreements that set out governance and exit rights, such as a Unitholders Agreement (for unit trusts) or a Partnership Agreement (if you’re not using a trust but operating as partners).

Step 3: Decide Who Will Be The Trustee

For most small businesses, you’ll choose either:

• an individual trustee (a person), or
• a corporate trustee (a company that acts as trustee).

Many business owners prefer a corporate trustee because it can make administration cleaner and may help with risk management and continuity (for example, if directors change).

If you decide to use a corporate trustee, you’ll need to set up the company first. That’s where a proper Company Set Up and an appropriate Company Constitution can matter, particularly if the company is intended to act as a trustee and you want clear rules around director/shareholder decision-making.

Step 4: Define The Key Roles (Settlor, Beneficiaries, Appointor)

This is where trust setups often go wrong when done casually.

Some practical points to think about:

• Settlor: usually contributes a nominal amount to establish the trust and, in many structures, is not intended to benefit from the trust (your deed and circumstances matter here).
• Beneficiaries: list the intended beneficiaries (or classes of beneficiaries) who may receive distributions.
• Appointor: consider who should hold ultimate control of the trust (through the power to replace the trustee). This is a big governance decision, not just “admin.”

If your startup has multiple founders, you should be especially careful here. Control and succession can become very sensitive if relationships change or if you bring in new stakeholders later.

Step 5: Prepare And Sign The Trust Deed

The trust deed is the legal document that creates the trust and sets the rules for:

• what the trustee can do (buy/sell assets, run a business, borrow money, etc.)
• how beneficiaries are defined
• how distributions work
• who controls key decisions
• how trustees can be appointed/removed
• what happens if you want to wind up the trust

In a business context, you’ll also want to make sure the deed aligns with how you’ll actually operate. For example, if the trust will sign customer contracts, employ staff, or hold IP, the deed needs to support that.

Depending on the state or territory and the specific circumstances (including what assets are being transferred and when), stamp duty may be relevant either when the trust is established or when assets are later transferred into the trust. For the duty and tax position, it’s important to speak with your accountant or a registered tax adviser, and make sure your legal documentation is fit for purpose.

Step 6: Apply For A TFN (And Then ABN If Needed)

After creating a trust, you will generally apply for a Tax File Number (TFN) for the trust. This is important because the trust will need to lodge tax returns.

Whether you need an Australian Business Number (ABN) depends on what the trust is doing. If the trust will be carrying on an enterprise (for example, running a trading business), it will typically need an ABN.

If the trust is registering for GST (for example, once turnover reaches the threshold, or earlier if you choose), that also ties into ABN registration and ongoing reporting. This is a good moment to get accounting advice from an accountant or registered tax adviser to ensure you register correctly and on time.

Step 7: Set Up The Trust’s Contracts And “Operating Paperwork”

Creating a trust is only part of the picture. If the trust will run a business, you also need contracts that reflect the trust structure.

For example:

• Customer terms should be in the trustee’s name (as trustee for the trust)
• Supplier agreements should match the same legal party
• Employment documents should clearly identify the employer
• Any IP created should be owned by the correct entity (trustee as trustee, or assigned/licensed correctly)

This is where getting your legal documents aligned early can save you a lot of pain later, especially if you’re applying for finance, dealing with a major supplier, or selling the business down the track.

Do I Need A Trust Bank Account (And How Do I Set Up A Trust Account)?

If you’re creating a trust for business purposes, you will almost always want a dedicated bank account for the trust.

Practically, this helps you:

• keep clean financial records
• separate trust money from personal money
• show clear evidence of trust transactions (which can matter for compliance and disputes)

When people search for “setting up a trust account”, they’re often referring to a bank account in the name of the trustee as trustee for the trust (for example, “ABC Pty Ltd ATF The ABC Trust”).

What You’ll Usually Need To Open A Trust Bank Account

Each bank’s requirements vary, but commonly you’ll need:

• a signed copy of the trust deed (and sometimes variations)
• the trust’s TFN (and ABN, if applicable)
• details of the trustee (ID checks for individual trustees, or company documents for corporate trustees)
• details of directors and beneficial owners (if the trustee is a company)

One important practical point: the name on invoices and contracts should match the legal party that receives and pays money. If the trust is the operating vehicle, consistency matters.

What Ongoing Compliance Should A Trust-Based Business Plan For?

Once you’ve set up a trust, you’ll want to plan for ongoing compliance. This is where many small businesses get caught out, not because they did anything intentionally wrong, but because they didn’t realise the trust adds another layer of administration.

Annual Trust Admin (Including Resolutions)

Most trusts require the trustee to properly document decisions-especially around distributions. This often means preparing trustee resolutions within specific timeframes each year.

Your accountant will usually handle the tax side, but it’s still important that your legal documentation supports what you’re doing in practice.

Australian Consumer Law (If You Sell To Customers)

If your trust is running a business that sells products or services, you still need to comply with the Australian Consumer Law (ACL). That includes rules around misleading claims, refunds, warranties, and fair contract terms.

A trust structure doesn’t change your customer law obligations. It just affects who is contracting with the customer (the trustee).

Privacy And Data (If You Collect Customer Information)

If your business collects personal information (even just names, emails, delivery addresses, or IP addresses through a website), you should think about privacy compliance early.

In many cases, having a Privacy Policy is a practical baseline, and you may also need consent language and internal procedures depending on what data you collect and how you use it (marketing, analytics, third-party platforms, overseas storage, and so on).

Employment Law (If The Trust Will Hire Staff)

If you’ll hire employees, the trustee (as employer) needs to meet Fair Work obligations, including minimum entitlements, correct classification, and clear employment terms.

Even if you’re hiring your first team member, it’s worth getting the paperwork right, including an Employment Contract that correctly identifies the employing entity and sets expectations on duties, confidentiality, and termination.

Finance And Security Interests (If You Borrow Or Buy Equipment On Terms)

If the trust borrows money or purchases equipment with finance attached, the lender may require the trustee to sign security documents.

Depending on the arrangement, this can involve a General Security Agreement and registration steps that affect how assets are secured. This is one area where it’s worth getting legal advice before signing, because the terms can have long-term impact on your business and your ability to refinance.

Key Takeaways

• “How to start a trust” really means setting up the legal relationship properly: choosing the right trust type, defining roles (trustee, appointor, beneficiaries), and putting a fit-for-purpose trust deed in place.
• Deciding whether to use an individual trustee or a corporate trustee is a major step, and a corporate trustee often provides clearer governance for small businesses.
• Once the trust is created, you’ll usually need a TFN, and you may need an ABN (particularly if the trust will operate a trading business).
• Setting up a dedicated trust bank account helps with clean record-keeping and shows clear separation between trust funds and personal funds.
• A trust-based business still needs strong contracts and compliance systems, including customer terms, privacy documentation, employment documents, and properly documented trustee decisions.
• Getting advice early can save you time and avoid costly restructure work later, especially if you plan to raise capital, buy assets, or expand. For tax and duty questions, speak with an accountant or registered tax adviser.

If you’d like a consultation on how to start a trust for your small business or startup, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.