Most arrangements commonly called “family trusts” are discretionary trusts, meaning the trustee has discretion about which beneficiaries receive trust income or capital, subject to the terms of the trust deed.
The trustee is responsible for administering the trust and legally holding trust assets.
However, the trust deed may also give an appointor, principal or guardian important powers, including the ability to appoint or remove a trustee.
For succession planning purposes, control of the trustee and succession to appointor powers can therefore be just as important as identifying the beneficiaries.
Not in the same way as an individual directly owns property.
A discretionary beneficiary generally has rights concerning the proper administration of the trust but does not automatically have a fixed entitlement to a particular trust asset.
The precise rights depend heavily on the terms of the deed.
The High Court’s decision in Fischer v Nemeske Pty Ltd [2016] HCA 11 illustrates the importance of the wording of the trust deed when determining whether a trustee has validly exercised a power to distribute or apply trust property. High Court of Australia
Trust taxation is principally governed by Division 6 of Part III of the Income Tax Assessment Act 1936 (Cth).
Broadly, under s 97, a beneficiary who is presently entitled to a share of trust income may be assessed on the corresponding share of the trust’s net income. Where no beneficiary is presently entitled, the trustee may instead be assessed under provisions including ss 99 and 99A. Australian Taxation Office
Trust taxation can become considerably more complex where companies, non-residents, capital gains or unpaid entitlements are involved.
No.
A Family Trust Election, or FTE, is a specific federal tax election under s 272-80 of Schedule 2F to the Income Tax Assessment Act 1936. Australian Taxation Office
Making an FTE can provide benefits in relation to certain trust tax rules, but it also defines a particular family group and can create tax consequences if distributions are made outside that group.
A typical discretionary family trust may be treated as a special trust under s 3A of the Land Tax Management Act 1956 (NSW).
Special trusts generally do not receive the ordinary NSW land tax threshold. Revenue NSW expressly identifies family and discretionary trusts as structures that can fall within the special-trust rules. Revenue NSW
This can make the ownership structure particularly important before a family trust acquires NSW land.
This requires particular care.
Under s 104JA of the Duties Act 1997 (NSW), a discretionary trust can be treated as a foreign trustee for surcharge purchaser duty purposes unless its terms prevent foreign persons from being potential beneficiaries and satisfy the statutory no-amendment requirement. Related rules apply to surcharge land tax under s 5D of the Land Tax Act 1956 (NSW). NSW Legislation
A broad beneficiary definition covering overseas relatives can therefore have unexpected NSW tax consequences.
Not automatically.
The outcome depends on the structure and the degree of control exercised by the relevant spouse.
In Kennon v Spry [2008] HCA 56, the High Court considered a family trust in matrimonial property proceedings and upheld orders that took the trust structure and assets into account in the particular circumstances of that case. High Court of Australia
A family trust should therefore not be viewed as an automatic method of insulating assets from family law claims.
Last updated: September 2026
Jurisdiction: New South Wales, Australia
Disclaimer: This article provides general information only and does not constitute legal, financial or tax advice. The law may change and its application depends on individual circumstances. You should obtain professional advice before acting on the information contained in this article.