Corporate Trustee vs Personal Trustee: Which Structure Is Right for Your Trust?
Written by Shara Cox & Daniel Dubois
When establishing a trust, one of the most important decisions is choosing who will act as trustee. The trustee controls the trust’s assets and is legally responsible for ensuring the trust operates in accordance with its deed and relevant laws.
Two common options are appointing individuals as trustees (personal trustees) or establishing a company to act as trustee (corporate trustee). While both can be effective, a corporate trustee often provides greater flexibility, protection, and long-term efficiency.
Below we explore the key differences and benefits of each structure.
What Is a Personal Trustee?
A personal trustee structure appoints one or more individuals (often family members) to act as trustees of the trust.
Advantages:
Lower initial setup costs
Simple to establish
Suitable for smaller or short-term trusts
Considerations:
Trustees are personally liable for trust obligations and liabilities
If any trustee leaves or is replaced, asset titles must all be updated
Potential legal and banking complications if a trustee becomes incapacitated or passes away
What Is a Corporate Trustee?
A corporate trustee uses a company (usually with the trust’s controllers as directors and shareholders) to act as trustee.
Key Benefits:
Limited Liability
A corporate trustee provides a layer of asset protection. Liability generally sits with the company rather than with individuals personally, helping reduce personal financial exposure.
Easier Succession and Continuity
If a director changes or passes away, the company remains the trustee. This avoids the need to update asset ownership across bank accounts, investments, and property titles.
Clearer Asset Ownership
Assets are held in the company’s name as trustee for the trust, improving clarity and reducing administrative complexity.
Improved Control and Governance
Directors can be appointed or removed without changing the trust structure, allowing smoother control transitions over time.
Greater Credibility
Banks, lenders, and professional advisers often prefer dealing with corporate trustees due to their formality and consistency.
Cost Considerations
A corporate trustee typically involves higher upfront and ongoing costs, including company setup fees and ASIC annual review fees. However, these costs are often outweighed by the long-term administrative savings and risk reduction. Also noting that SMSF’s enjoy a lower annual ASIC fee than regular companies.
Which Option Is Best?
Personal trustees may be appropriate for simple or temporary arrangements. However, for most long-term family trusts, investment trusts, and SMSFs, a corporate trustee structure is considered best practice. Unit trusts in particular, given they are most often used for multi stakeholder property holdings, should always have a corporate trustee.
Appointor and upgrading to a Corporate Trustee
In any discussion on trusts, its also worth emphasising the importance of the role of Appointor. This is the person that determines who acts as the trustee of the trust, and is nominated in the trust deed. It can also be a joint position where more than one stakeholder is important for no single person to have absolute control and promote family/business harmony. Your trust deed should always have a succession plan for the Appointor.
Where a trust commenced with an individual trustee, with a little administrative work, including a nomination by the Appointor, it can be ‘upgraded’ to a corporate trustee.
Final Thoughts
Choosing the right trustee structure is a foundational decision that can impact asset protection, estate planning, tax management, and administrative efficiency. Reviewing your trust structure regularly ensures it continues to align with your objectives and personal circumstances.
If you would like to discuss whether your trust is structured appropriately, please contact our team for tailored advice.