This document provides the most common questions encountered when setting up a corporate trust account
Can I use the same name in the Family Trust Name and Corporate Trustee Name?
It is better for them to have two distinct names for clarity for other entities that deal with the Corporate Trustee and Trust.
We often recommend YOURSURNAME OR MISCELLANOUS NOMINEES Pty Ltd as trustee for the YOURSURNAME Family Trust as a good starting point.
What can we use or not use when choosing a Corporate Trustee Name?
Aside from using ‘Nominees’ in the title, you could also use ‘Holdings’ or ‘Investments’ for example. There are some names that can’t be used such as “Trust” but if there is a problem we would let you know.
What do I put for the Share Structure?
There would be 100 ordinary shares fully paid at $1 per share in the corporate trustee. It could be any number of shares but 100 is sufficient.
Who is an Appointor? Should my Trust have an appointor? And who should my appointer be?
An appointer is the person who has the ultimate control of the Trust. As the appointor you are the ultimate controller of the trust. You are able to appoint or remove trustees who make distributions to trust beneficiaries according to your discretion. It is not mandatory to have one, but if so the person in control should be the appointer.
If my trust owns shares in another company and my partner is a shareholder in my Corporate Trustee, what happens to the shares in my company if we separate?
If your trust owns shares in another company and your partner is a shareholder in your corporate trustee, the disposition of those shares in the event of separation would likely be determined by the terms of the trust agreement and any applicable laws. It is important to consult with a legal professional to understand your rights and obligations with regard to the shares in question and to ensure that any transfer of ownership is executed properly.
What is the difference between a shareholder and a beneficiary? Does a beneficiary only receive the shares upon an event such as death?
A shareholder is an individual or entity that owns shares in a company. Shareholders have a vested interest in the success of the company and are entitled to a portion of the profits and assets in proportion to the number of shares they own. Shareholders also have the right to vote on important company decisions and can participate in the management of the company.
On the other hand, a beneficiary is an individual or entity that is named to receive assets or benefits from a trust or estate. A beneficiary does not own shares in a company but rather receives assets or benefits from the trust or estate. A beneficiary can be an individual, such as a family member, or a charitable organization.
In some cases, a beneficiary may receive shares upon an event such as death, as part of an inheritance or distribution from a trust or estate. However, a beneficiary can also receive assets or benefits from a trust or estate in other ways, such as income or use of property.
It is important to note that shareholders and beneficiaries can be the same person, depending on the circumstances. For example, an individual can be both a shareholder and a beneficiary of a trust that holds shares in a company.
Should the registered office address be my home address?
Yes, so you receive important ASIC correspondence directly.
Can the corporate trustee directors be myself and my wife? If not, what criteria would make a good director?
Generally this is fine. As long as you are both based in Australia then generally no major implications. A legal review is recommended here for a full review and recommendation into your specific circumstances - particularly in the event of separation.
Who should be corporate trustee shareholders and what criteria would make a good shareholder?
This is usually the directors of the corporate trustee as well.
As long the shareholders are the people setting up the trust then this is generally best practice.
Should the beneficiaries be myself, wife and children or just children?
The former is better since there are tax planning options if yourself as well.
What are the tax implications for children under the age of 18 years who are beneficiaries?
Distributions to children under 18 (i.e. minors) are taxed at the highest rate beyond a small tax-free amount (~$520+). It is advisable to have yourselves as beneficiaries of the trust as well in the meantime.