In this edition of ‘It depends’, lawyer Sacha Robinson talks about whether the trustee for your family trust should be a company.
Welcome to today’s edition of It Depends.
Today, we will be talking about whether the trustee for your family trust should be a company.
Should the trustee of my family trust be a company?
It depends. We will discuss some advantages of both individual and corporate trustees.
What are the advantages of individual trustees?
Individual trustees may be considered simpler and cheaper because there is no establishment fee from the company. And there are also no ongoing ASIC fees or reporting obligations for the company.
What are the advantages of corporate trustees?
A trustee is personally liable for debts incurred on behalf of the trust.
This means that for individual trustees they can be personally liable for those debts incurred and although they have a right to be indemnified out of the trust assets, their personal assets can still be vulnerable.
One of the main advantages of having a corporate trustee is that it generally limits the liability of the individual controllers of the trust, as the company is a separate legal entity.
This can help with quarantining the risk of the trust activities from the individual controller.
Another important advantage of a corporate trustee is that there is a simpler succession of the trustee role.
So, if an individual trustee dies or resigns, the trust assets must be transferred to a new trustee, whereas an advantage of having a corporate trustee is that if the director dies or resigns, then the trust assets, there’s no need for them to be transferred.
They will remain within the company, which is still the trustee of the trust.
So, which option is right for my family trust?
Again, it depends. So, if you would like to discuss whether the trustee of your family trust should be a company, please contact me or another member of our team.