In the past, trusts were the investment vehicle of the rich, but in recent times, many Australians from all walks of life have begun using trusts to hold their assets.

Need to buy property using a trust?
Talk to our experts and get a free assessment.

Why do people invest using a trust?

  • Tax benefits: You may be able to reduce your tax bill by distributing income to family members with lower taxable income.
  • Asset protection: Trusts allow you to control & receive income from assets without having them in your name. This may protect these assets in the event that you’re sued or you go through a divorce.
  • Estate planning: Some trusts may allow you to effectively pass assets on to future generations without paying excessive taxes or going through estate disputes.

We recommend that you seek financial advice from your accountant to find out what benefits you may receive. Specialist asset protection lawyers can assist you in structuring your assets correctly to prevent losses.

Types of trusts

There are many variations on a standard trust and many people have their own private and unique arrangements. However, the most common types of trusts that we deal with are:

  • Discretionary trusts: the trustee determines which beneficiaries receive the trust funds and how much they receive.
  • Unit trust: the trustee divides the trust funds between unit holders, according to the number of units that they have.
  • Hybrid trust: this is a mix between a discretionary trust and a unit trust. The beneficiaries still hold units, but the trustee has discretion to distribute funds to any unit holder they wish to.
  • Family trust: this is similar to a discretionary trust, but the beneficiaries are related.
  • Self-Managed Super Fund (SMSF): this is a trust that’s established by people who want to manage their own superannuation.

How do you set up a trust?

You can set up almost any standard trust (discretionary trust, family trust, unit trust) online using Cleardocs, Shelfco, Law Central or Corporate Express.

You may be able to set up a hybrid trust or SMSF trust online, however many people prefer to use an accountant.

Once the trust deed has been created and signed the settler places a nominal sum (usually $10) in the trust.

The deed can then be sent to the state government for stamping, and the trust then becomes fully operational.

Getting expert financial advice

We strongly recommend that you see an accountant and seek financial advice before setting up a trust.

Online trusts are a cost effective way to set up a trust, however they will end up costing you more in the long run if the trust isn’t set up in the right way.

How can a trust own assets for someone else?

Assets are held “in trust” for beneficiaries who receive income and other benefits from these assets, without actually owning them.

The trustee is the one who manages the trust for the beneficiaries.

For example, if you buy a property in a trust then the title deeds may show, “ABC Pty Ltd As Trustee For The Smith Family Trust”.

In some states such as Queensland, only the name of the trustee is shown on title e.g. “ABC Pty Ltd”.

Do you want to obtain finance for your trust? Speak to our mortgage brokers on 1300 889 743 or fill in our free assessment form today and we can help you get approval for a loan.

Understanding trust jargon

Here is a list of trust related terms & jargon that you might come across:

  • Appointer: the appointer has the power to fire the trustee and appoint a new trustee. The appointer is specified in the trust deed.
  • As Trustee For (ATF): this is a legal term meaning that the asset is owned by one entity as trustee for another or that the entity is acting as trustee.
  • Beneficiary: the person(s) that receive benefits from the assets held in trust. This is generally in the form of trust distributions.
  • Company constitution: if the trustee is a company then there’s a company constitution guiding how the company is to be run and what rules it must follow.
  • Corporate trustee: a trustee that’s a company.
  • Director of trustee: the director of the trustee company.
  • Held in trust: assets owned by the trust on behalf of the beneficiaries.
  • In Its Own Capacity (IIOC): a legal term meaning that a trustee is acting on behalf of itself. For example, a trustee may apply for a loan in the following name “ABC Pty Ltd IIOC & ATF The Smith Family Trust”.
  • Individual trustee: a trustee that’s a natural person, i.e. not a company.
  • Settlor: the person who settles (opens) the trust by depositing the funds into it.
  • Stamp duty: a fee paid to your state government when opening a trust.
  • Trust deed: the legal document governing the operation of a trust. The trust deed names the trustee, beneficiaries, settlor and appointer and contains the rules that they must follow when dealing with the trust.
  • Trust distributions: income or assets distributed from the trust to the beneficiaries.
  • Trust registration: the act of stamping and registering the trust with the state government.
  • Trust: a legal instrument used by one party (the trustee) to hold assets on behalf of another (the beneficiaries).
  • Trustee: the person or company that runs the trust and manages the assets on behalf of the beneficiaries.
  • Unit holder: the owner of units in a unit trust.
  • Unit: a share of a unit trust which denotes entitlement to a share of the assets within that trust.

Trustee duties & powers

The powers that the trustee has are listed in the trust deed, and as such, they vary from trust to trust.

Generally, the trustee has few limits on its powers, as long as it’s following its duty to act in the best interests of the beneficiaries.

Lenders will always check your trust deed to make sure that the trustee has the power to apply for loans for the trust.

We occasionally see trust deeds that were specifically set up to borrow money, known as Property Investor Trusts (PITs) that lenders can’t lend money to.

Please choose your accountant carefully to avoid this problem!

Tax for trusts

As a general rule, trusts are required to lodge a tax return just like a company or a person.

Trusts are charged the highest possible level of tax which is why income is usually distributed to the beneficiaries at the end of each financial year.

Taxation rules for trusts are complex and vary between different trust types.

Contact your accountant for specific financial advice for your trust.

Applying for a trust loan

You can apply for a home loan to buy an investment property in a trust. Our company has mortgage brokers that specialise in helping people borrow money using their trust.

Please contact us on 1300 889 743 or complete our free assessment form to discuss your needs with one of our brokers.

  • David McClane

    I’m planning to obtain an investment property with my trust. Do all the beneficiaries have to provide guarantee for it? What’re the requirements for buying a property with a trust?

  • A trust loan is typically set up as your trust being the borrower and you and your partner as guarantors. Being guarantors/ beneficiaries means you guarantee the loan and are responsible the loan being paid.

    Lenders may require several documents in order to process a loan for a trust. They will particularly need:
    -A certified copy of the stamped trust deed.
    -A certified copy of the company constitution if there is a company trustee.
    -Documents of identification for all trustees, directors of trustees and beneficiaries of the trust.
    -Tax returns and notices of assessment of the trust, this requirement may be waived for low doc loans or new trusts.

  • Isabel S

    I want to use my unit trust to get a home loan but my company is the trustee. Will there be any problems securing the finance?

  • Hey Isabel,

    Not all banks view trust loans the same way. Some lenders have restrictions on lending to unit trusts with a company as the trustee, but can accept trusts with a personal trustee. It largely depends on the lender that you apply with. You can even borrow more at a better interest rate by choosing the right bank. Please call 1300 889 743 if you’d like to discuss your situation and loan needs with an expert trust mortgage broker.

  • Hercus

    Hi, my trust distributes $45,000 to my wife annually so can this be added back for a higher assessable income?

  • Hi Hercus,

    It’s likely that lenders may consider that amount as a living expense if your wife is not working. Also, a beneficiary who is 18 or over is a legal entity which means you can’t just say to the lender that you’re no longer going to be making trust distributions to them, especially if there is already a two to three year history of you making consistent payments from your income. Mortgage insurance providers don’t like trust distributions at all and most lenders tend to take the same black and white approach.

    We know lenders that can “add” this distribution back into your assessable income because they understand that it is not a real expense and has been done for tax purposes. You can call 1300 889 743 and speak with one of our expert trust loan mortgage brokers if you want to discuss in detail.

  • Struth

    I have a NFP, private, tax-free foundation that I am thinking to set up a private trust for. (The foundation would be the only beneficiary and one of the participants the trustee). Would such a trust be able to get a loan for property?

  • Hi Struth,
    That would likely need to be a commercial loan due to the nature of the borrowing entity. It would be a case by case basis.
    The main conditions would be:
    – Directors of the trustee must be guarantors
    – The foundation may need to be a guarantor
    – There must be a confirmed ongoing income source to service the debt
    – The LVR would need to be relatively low (60% – 80%)
    – The trust deed and equivalent documents for the foundation must not have any restrictions on being able to borrow or guarantee a loan.
    Overall I’d say it would be difficult.

  • moo

    What docs will the bank need from me to process a trust loan?

  • There are several documents that the bank will need from you in order to process a loan for a trust, particularly:
    – A certified copy of the stamped trust deed.
    – A certified copy of the company constitution (if there’s a company trustee).
    – Identification for all trustees, directors of trustees and beneficiaries of the trust.
    – Tax returns and notices of assessment for the trust (not always required, in particular for low doc or for new trusts).

  • Rio Budiman

    Hi, I was wondering, if i would like to setup family trust with my parent, and use this trust to purchase a property, can this transaction be considered as a proof of owning property to extend my parent’s permanent residency visa? Thanks

  • Hi Rio,
    Possibly it can. You’d need to talk to the department of immigration as I’m only an expert in home loans.

  • Jake White

    Regarding a home loan to buy an investment property in a trust? Are the interest rates and deposit any different to a regular home loan? What are the differences?


  • Hi Jake
    Some banks limit trust loans to be 70% or 80% of the property value because they process them as a business loan via business banking.
    We go with lenders that treat them like a home loan so you can get better rates and borrow up to 90% or in rare cases 95%.

  • Tester

    Hi there, I am looking to set up a trust to purchase a property. But I’m not sure how much is required to start it off?

  • Hi Tester,
    Unfortunately, we cannot advise you regarding setting up of a trust. You need to speak with a professional accountant for details. Once you’re ready to get a home loan, call 1300 889 743 to discuss your property buying plans with one of our specialist brokers.
    We’re experts in:
    Discretionary trusts
    Unit trusts
    Hybrid trusts
    Family trusts
    Self-Managed Super Fund (SMSF)

  • Alex

    I have a Discretionary Trust and am looking to buy an investment property around $400,000, I only have $77,000 in combined super with my wife.
    Would I be able to qualify for finance?

  • Hi Alex,
    A discretionary trust is not a SMSF. Just to be clear are you looking to use your superannuation to set up a SMSF to buy an investment property? Or are you looking to use funds that you have elsewhere (not in super) to buy an investment property in your discretionary trust? Also are you working or are you retired?

  • Alex

    My apologies, I didn’t word that correctly, Yes, I need to set up an SMSF to buy an investment property through my trust. I am also currently working full time.

  • Hi Alex
    You could set up an SMSF however the costs of setting it up and running it are generally not worth it unless you have $200k to $300k to put into it. We can’t give you financial advice but I would recommend that you investigate these costs and seek financial advice before you decide to proceed.
    Most lenders wouldn’t be able to help as you wouldn’t meet their minimum net fund asset requirements. There’s more info here

  • Polly

    Hello, I’m interested in taking a loan to purchase an investment property which would eventually become a second-home (in 8-10 years). I am currently a non-resident, working overseas and as such the property will attract a hefty CGT whenever we sell the property. Would using a trust to purchase, limit the eventual CG tax due upon selling (either by us or our beneficiaries – children)?

  • Hi Polly
    My understanding is that the CGT liability would not be better under a trust structure however I’m not an accountant so it’s best to ask this to an accountant to be sure.
    We’re specialists in lending to people living overseas to buy properties in Aus. There’s more info about this subject here

  • Polly

    Thank you.