Existing user? Sign in
Share your needs with us, get contacted by law firms.
Free. Takes 2 min.
Trusts are legal arrangements where one person or entity - the trustee - holds and manages assets for the benefit of others - the beneficiaries - in accordance with the terms set out in a trust deed or by law. In Fairfield, which is in the state of New South Wales, trusts are governed by a mix of state legislation, common law principles developed by courts, and federal taxation rules. Trusts are used for many purposes - family wealth management, estate planning, holding property, operating a business, and particular commercial structures such as unit trusts.
Common types of trusts you will encounter include discretionary trusts - often called family trusts - where the trustee has discretion about distributions; fixed trusts, where beneficiaries have defined entitlements; testamentary trusts created by a will and activated on death; and trustee companies or public unit trusts for commercial activity.
A lawyer who specialises in trusts can provide advice and practical help across many situations. Common reasons to seek legal help include:
- Establishing a trust - choosing the right type, drafting a clear trust deed, and setting trustee powers and beneficiary classes.
- Estate planning that uses trusts - integrating testamentary trusts into wills, or varying existing arrangements to achieve estate objectives.
- Trust administration - helping trustees understand their duties, prepare minutes and resolutions, keep records, and meet statutory and tax obligations.
- Trust disputes - when beneficiaries challenge trustee decisions, allege breaches of duty, or seek removal or replacement of a trustee.
- Tax and compliance issues - ensuring distributions, reporting and record-keeping comply with Australian Taxation Office requirements; advising on transfer duty and stamp duty risks in NSW.
- Asset protection and creditor issues - assessing whether a trust will provide protection and handling claims by creditors, insolvency events or family law proceedings where trust assets are in dispute.
- Business restructuring - using unit trusts or other trust arrangements for investment and commercial purposes.
Key legal and regulatory matters relevant to trusts in Fairfield fall under both New South Wales law and federal law. Important points include:
- Trustee Act 1925 (NSW) - this statute sets out various powers, duties and liabilities of trustees in NSW. It also governs some aspects of trustee decision-making and investments. The Act operates alongside judge-made equitable duties that require trustees to act honestly, impartially and for the benefit of beneficiaries.
- Succession Act 2006 (NSW) - controls family provision claims and some matters that affect testamentary trusts and estate administration. Beneficiaries or dependants can challenge wills and associated testamentary trusts under this Act.
- Property and registration law - transfers of real property into trust must comply with land title rules under the Real Property Act 1900 (NSW). Transfers may attract transfer duty or stamp duty in certain circumstances - you should seek specialist advice where property moves into or out of a trust.
- Australian Taxation Office rules - trusts have specific taxation treatments. Trustees must lodge trust tax returns, make distribution resolutions for each financial year, and understand how income, capital gains and franked dividends are allocated to beneficiaries. Undistributed income may be taxed at the top marginal rate on the trustee in many cases.
- Family Law Act 1975 (Cth) and family law practice - family court proceedings can affect trust assets where a trust is part of a separation dispute. Courts may look behind the trust - for example, where a trust is effectively controlled by one party - to achieve a fair property settlement.
- Courts and dispute resolution - serious trust disputes are typically heard in the Supreme Court of New South Wales. Some matters may also be resolved through mediation, alternative dispute resolution or, in limited cases, by tribunals.
- NSW Trustee and Guardian - this state body both acts as a professional trustee and provides information and services related to estate administration and guardianship in NSW. It can be a useful point of contact for people needing trustee services or guidance.
A discretionary trust gives the trustee the power to decide which beneficiaries receive income or capital and in what proportions. A fixed trust gives beneficiaries defined shares or entitlements. Discretionary trusts are commonly used for family wealth management because of their flexibility. Fixed trusts are used where beneficiaries need certainty, such as in some commercial investments.
Setting up a trust normally involves choosing the trust type, appointing a trustee and a settlor, identifying beneficiaries or beneficiary classes, and drafting a trust deed that records the trust’s terms. A lawyer will draft or review the deed, advise about trustee powers and duties, and help with tax and property transfer considerations. You will also need to apply for an Australian Business Number and tax file number for the trust if taxable.
Trustees owe fiduciary duties and statutory duties - they must act honestly, avoid conflicts of interest, act in the best interests of beneficiaries, exercise reasonable care and skill, obey the trust deed, keep proper accounts and records, and follow statutory duties under the Trustee Act and tax law. Breach of duty can lead to court orders, removal, or personal liability.
Yes. Beneficiaries can challenge trustee decisions if the trustee has acted outside their powers, acted dishonestly, failed to consider relevant matters, or otherwise breached their duties. Remedies can include setting aside decisions, compensation, or removal and replacement of the trustee. Early legal advice is important to assess prospects and options.
Trusts can provide some protection, but protection is not absolute. Courts can look behind trusts where they are a sham, where control rests with a person who then acts to defeat creditors, or in family law matters where the trust is effectively that person’s asset. Each situation is fact-sensitive - seek specialist advice if creditor action or relationship breakdown is a risk.
Trusts must lodge an annual trust tax return. Income is usually taxed in the hands of beneficiaries when distributions are made - beneficiaries include distributed income in their personal tax returns. Undistributed income may attract tax at the trustee’s rate or special rates depending on the circumstances. Capital gains and dividend franking credits have specific rules. You should get advice from a tax lawyer or accountant about your trust’s tax position.
When a settlor dies there is usually no automatic effect on an existing trust, unless the deed says otherwise. If a beneficiary dies, their entitlements depend on the trust deed - some trusts allow substitution of beneficiaries. Testamentary trusts created in a will take effect after death and are treated as part of estate administration. Legal advice will help manage estate obligations and any family provision claims.
Costs vary with the complexity of work. Simple trust deeds and straightforward advice will be less expensive than complex commercial structures or litigation. Many lawyers offer an initial consultation - sometimes fixed-fee - and will provide a costs estimate. Ask for a fee estimate, billing structure, and scope of work before engaging a lawyer.
Changing a trust depends on the deed and legal constraints. Some deeds include power to vary or appoint a new trustee. In other cases, beneficiaries and trustees may apply to court to vary the trust - for example, under the Trustee Act or through a court order in the Supreme Court of NSW - where variation is necessary or justified. Variations can have tax and duty consequences.
Look for a lawyer with experience in trusts and estates or commercial trusts, accreditation where relevant, and clear communication. Ask about their experience with the specific type of trust you have or need, fees and likely timeframes, and whether they work with tax advisers. Local knowledge of NSW and Fairfield matters can be an advantage. Consider initial consultations with two or three advisers before deciding.
When you need further information or assistance, consider these organisations and services - they provide guidance, official information and referrals for trusts and related issues in New South Wales and Australia:
- NSW Trustee and Guardian - provides trustee and estate services and information on wills and administration.
- Law Society of New South Wales - a resource for finding accredited solicitors and for guidance on legal practice standards.
- Australian Taxation Office - for taxation rules that apply to trusts and trustee obligations.
- Supreme Court of New South Wales - for information about litigation processes and court jurisdictions dealing with trust disputes.
- Legal Aid NSW and local community legal centres - for low-cost or free legal help if you are eligible. There are local community legal services in the Fairfield region that assist with wills, estates and related matters.
- Family Court and Federal Circuit Court information - where family law matters involving trusts may be litigated.
If you believe you need legal assistance with a trust in Fairfield, take these steps to move forward:
- Gather documents - trust deed, minutes or resolutions, bank statements for the trust, property title documents, wills if relevant, recent tax returns, and correspondence that relates to the trust or dispute.
- Prepare a clear outline - write down the issue you face, a timeline of events, the people involved, and your desired outcome. This helps your lawyer give effective initial advice.
- Arrange an initial consultation - ask about experience in trust law, likely costs, a fee estimate, how the matter will be handled, and potential alternative dispute resolution options.
- Consider tax and accounting input - for matters involving distributions, capital gains, or business restructuring, you will likely need an accountant or tax lawyer to work with your solicitor.
- Keep records and act promptly - trustees should maintain proper records and take advice early when disputes or complex choices arise. Delays can affect legal rights and tax positions.
Working with an experienced solicitor will help you understand your rights and obligations under New South Wales law and produce a plan that considers both legal and tax consequences. If you are unsure where to start, contact a local legal practice with trusts and estates expertise or a community legal centre for an initial referral.
