But before you dive in and declare yourself “Lord of the Trust,” here are a few key things to consider. Spoiler: it’s not a set-and-forget kind of deal.
What’s the Purpose of the Trust?
At Standard Ledger, we often help founders set up a family trust to hold their shares when creating their startup company. But the same trust can also be used to hold investment property, a share portfolio, or that classic collector’s wine cellar (no judgement).
Your goals shape how you structure the trust, so it pays to be clear about the outcomes you’re aiming for from the get-go.
“Setting up the right structure early on can save a world of pain—and a fair chunk of tax—later. We always encourage founders to think long-term and align the trust structure with their business and personal goals.”
— Remco Marcelis, CEO and Founder, Standard Ledger
Who Will Be the Trustee?
The trustee is the legal controller of the trust (think: executor for an estate, but with more spreadsheets and less drama). They make the decisions about how proceeds are distributed.
You can nominate an individual trustee (like yourself, plus another trusted family member), or go with a corporate trustee (i.e. a company you control). Corporate trustees tend to offer more flexibility and separation, which is handy down the track—especially when it comes to succession planning or dealing with investors. Of course, they do come with extra maintenance costs (hello, ASIC and ATO fees).
Need help choosing? We’ve covered this kind of practical decision-making in our guide to getting your startup structure right.
Who Are the Beneficiaries?
Unlike a family Christmas lunch, where everyone gets the same overcooked turkey, in a discretionary trust, beneficiaries don’t have fixed entitlements. The trustee gets to decide who gets what.
The trust deed will usually include a broad, catch-all description of potential beneficiaries (think: anyone within six degrees of Kevin Bacon), but you might want to refine this if you’ve got specific plans. And yes, you can update the definition of beneficiaries later—especially relevant when you’re gearing up for an exit event.
Ongoing Admin and Compliance
Trusts aren’t exactly a “set and forget” situation. You’ll need to lodge a separate tax return each year, keep records of trustee decisions, and manage distributions carefully to keep the ATO onside.
That’s where we come in. At Standard Ledger, we handle compliance, admin and tax lodgements, whether it’s for an active trust or a quiet one that’s just sitting there holding your startup shares. Even a “NIL” tax return still needs lodging. (Yes, even when nothing’s going on.)
Check out our piece on how to pay yourself from your startup company for more tips on staying in the ATO’s good books.
That Sounds Like a Lot. Do I Really Need a Trust?
You might be tempted to just put yourself down as the shareholder for now and deal with the trust stuff later. Technically, yes—you can do that. But transferring shares from yourself to a trust later counts as a sale, which means capital gains tax (CGT) could apply.
And while you might be able to argue the company is worth “nothing” early on, that argument gets a lot harder once you’ve got a product, a brand, revenue, or (gasp) investors. You’ll likely need an official valuation if you want to convince the ATO.
We go into this CGT dilemma (and other founder foibles) in more detail in our article about putting money into your startup company.
Final Thoughts
A discretionary trust can be a great structure—especially for founders, families, and investors looking for long-term flexibility and protection. Just make sure you understand the moving parts and seek solid legal and tax advice (hi 👋).
If you’re grappling with trust setup as part of broader end-of-year planning, our no-nonsense guide on what to do when EOFY is looming and you just don’t care might be just what you need.
What’s Next?
If you’re still unsure whether a trust is right for you, or if you’ve already got one and want to make sure it’s working for you (not just collecting dust), we’d love to help.
📅 Book a free consult with our team to talk trust structures, startup setups, and avoiding tax surprises down the track.
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