Do you want to know whether your family trust should have a corporate trustee or an individual trustee?

Making a wrong choice could have significant unintended consequences so it’s important to understand the differences.

This article lists the relevant issues and the pros and cons of a corporate and individual trustee, so that you can make an informed decision.

1. A Trustee is Liable for the Debts of the Trust

If the trustee is an individual, then personal assets may be at risk if there are not enough assets held by the trust to pay debts, as a trustee is liable for the debts of the trust. The liability of the individual trustee can not be erased by changing the trustee.

A corporate trustee will almost certainly have no assets other than initial share capital (most likely $2 or $10), so in the event of being sued or going broke, there are no additional assets at risk.

2. Changing Ownership of Trust Assets is Significantly Easier with a Corporate Trustee

Trust assets are registered in the name of the trustee. If an individual trustee passes away or wants to cease to act as trustee, the ownership documents for all trust assets must be redone. This can be a messy and expensive process.

If there is a corporate trustee, there is no such issue when a director of the corporate trustee passes away or ceases to act as director. A new director can be appointed and ownership of trust assets remains registered in the name of the corporate trustee.

3. Identifying Ownership of Trust Assets Can Be Complicated by Having an Individual Trustee

As mentioned above, trust assets are registered in the name of the trustee. If a trustee does not complete ownership documents in full by referring to the trust (eg. Joe Blogs as trustee for the Blogs Family Trust), then it is difficult to prove that ownership of the assets is held by the trust rather than the individual.

In NSW, the land titles office will only register land in the name of the Trustee (no reference to the Trust), so other documents are required (Declaration of Trust or Acknowledgement of Trust) to prove the land is held on behalf of a Trust.

If the individual trustee is sued or becomes bankrupt, they will have to argue that assets are owned by the trust rather than themselves which can be difficult and expensive.

4. Costs

Establishing a company costs $488 for ASIC registration and between $150 and $400 for the constitution and other legal documents. These costs are not incurred when establishing a trust with an individual trustee (professional fees and legal fees for the trust deed will still occur).

A company incurs an annual ASIC fee, currently $263 whereas an individual trustee does not incur an annual cost.

5. Purpose of Your Trust – Engaged in business or just holding assets

If your trust is used to carry on a business, it is clear that having a corporate trustee is better than an individual trustee.

If your trust is only holding passive assets, you may consider the cost of a corporate trustee too great and want to use an individual trustee. However, if you go down this path, you should be clear that there may be issues with changing ownership of and identifying assets. Furthermore, your circumstances and use of the trust may change, resulting in the issue of personal liability as a trustee becoming relevant.


In summary, there are significant benefits of using a corporate trustee that are not available to individual trustees. Once the setup costs have been taken into account, the difference in annual cost is $260 and in most cases, this will not be prohibitive.