At some point in the life of a growing business, the question of how assets and income are held stops being academic. Maybe the business is about to take on investors, maybe a family member is joining the operation, or maybe the tax position has made restructuring look attractive. Once the decision to set up a trust is made, the practical question follows quickly: what actually has to happen, in what order, and how long will each step take?
Done properly, the process ends with an executed trust deed, an ABN and TFN registered for the trust, a bank account in the trustee's name, and a structure that can trade, hold assets and distribute income to beneficiaries. What most people do not realise is that the deed alone does not make the trust operational. The trust only starts holding property once the settlor pays the settlement sum to the trustee, and banks and suppliers generally will not deal with the trust until the registration and banking steps are complete.
What You Need Before You Start
Most of the delays in a trust setup are decided before anyone drafts a document. Tick off the following before engaging anyone:
- Trust type: whether you need a discretionary (family) trust or a unit trust, and how income and capital will be distributed between beneficiaries or unit holders.
- Trustee: whether an individual or a company will act as trustee. If a company, you need a proposed name, directors and shareholders, and director identification numbers obtained before lodgement.
- Beneficiaries and appointor: the classes of beneficiaries, and who will hold the power to remove and replace the trustee, often called the appointor or principal.
- Settlor: a person willing to provide the initial settlement sum, who is not a beneficiary and will have no ongoing role.
- Trust name and settlement sum: the name the trust will be known by, and the amount, often a nominal sum of around $10, that the settlor will settle on the trustee.
- Identity documents: identification for the trustee and the proposed bank signatories, ready for the bank's verification checks.
The items that actually trip people up are the director identification number, which must be applied for before a company can be registered, naming the appointor, and gathering identity documents before the bank asks for them. Each of these is a short task on its own, but each can hold up a different step of the process.
The Setup Process, Step by Step
The order below follows the way the registries and banks actually process things. The timeframes assume the prerequisites above are settled and the information is at hand.
Confirm the Trust Type and Governance
This is a decision step, and it produces the brief for the trust deed. It can be done in a day, but it is the step people rush, and the consequences show up later in the drafting:
- Decide between a discretionary trust, where the trustee chooses which beneficiaries receive income and capital each year, and a unit trust, where beneficiaries hold fixed units and receive distributions in proportion to their holdings.
- Confirm who will control the trust, including who can remove and replace the trustee, and what happens if that person dies or becomes incapacitated.
- Settle how income and capital will be distributed, and whether any beneficiary class needs special treatment for tax or family reasons.
If these questions are left open while the deed is drafted, the deed gets drafted twice, or amended shortly after execution, which costs more than any registry processing delay.
Incorporate the Trustee Company
This step is only needed if a company will act as trustee, but it is the extra step that makes a corporate trustee setup run a day or two longer than an individual trustee setup. A company can be registered online through the Business Registration Service, and ASIC's guidance on registering a company sets out the building blocks you need before lodgement:
- A company name, or the decision to use the ACN as the name.
- A state or territory of registration, plus a registered office address and a principal place of business address.
- Internal rules, either the replaceable rules under the Corporations Act 2001 (Cth) or a custom constitution.
- A share structure, the shareholders and their written consent to the shares they will hold.
- Directors and a secretary, each with a signed consent, and each director must already hold a director identification number.
ASIC processing for a straightforward online registration is usually completed within a day or two, and a registration fee applies, so check the current ASIC fees before you budget. What comes back is the company's ACN, a certificate of registration and a corporate key sent to the registered office. The certificate of registration is the document the bank will want to see when the trustee company opens the trust account.
Draft and Execute the Trust Deed
The trust deed is the core legal document. It creates the trust and sets out who the beneficiaries are, what powers the trustee has, how income and capital are distributed, how the deed can be varied and when the trust vests. Drafting a bespoke deed that reflects the business's actual activities and plans typically takes one to three business days with a lawyer, and faster if the decisions above have been made.
Execution is where setups go wrong. A deed must be executed as a deed, not signed like an ordinary contract. If the trustee is a company, it executes the deed under s 127 of the Corporations Act 2001 (Cth), which requires the signatures of two directors, or a director and the company secretary, or, for a proprietary company with a sole director who is also the secretary, that director. The section expressly allows the signing requirement to be satisfied electronically, so wet ink is not compulsory. If the trustee is an individual, they sign the deed and their signature is witnessed, and the witness rules vary between states.
What this step produces is the executed deed, the instrument that creates the trust. Until it is properly executed, none of the later steps can happen, because the bank and the registries will not accept a document that was not validly signed.
Register the ABN and TFN
Once the deed is executed, the trustee registers the trust for tax purposes. The application is done online at abr.gov.au, and a single ABN application covers both the ABN and the TFN at the same time.
The ABN is usually issued immediately when the application is completed online, provided all required information is supplied. If information is missing or cannot be verified, the application is processed manually and can take up to 28 days, so it pays to have the trust's details final before applying. The TFN for the trust is applied for by the trustee in their capacity as trustee, and the ATO's guidance on trust registration notes that "The Trustee for" is automatically added to the trust's name on registration.
The TFN can take longer to arrive than the ABN, but the trust can usually open a bank account and start operating while the TFN is pending. The ABN matters more at the start, because suppliers and the bank will ask for it.
Register a Business Name (If Needed)
If the business will trade under a name that is not the trustee company's legal name, a business name must be registered with ASIC on the business names register, which is separate from the companies register. This is a quick online process once the trustee details are settled, and the name must be renewed periodically through ASIC. A business name does not create any legal entity on its own; it simply records the name the trustee trades under.
Open the Trust Bank Account
Banks require the executed trust deed, identification for the trustee and signatories, and, for a corporate trustee, the ASIC certificate of registration. Most banks also want the trust's ABN. Allow one to five business days for the account, depending on the bank and on whether you are an existing customer, and expect the bank's verification process to take longer for a newly incorporated trustee company than for an individual.
The practical point is that the bank account cannot be opened until the deed is executed and the trustee company, if there is one, is registered, so the deed is the gate for this step.
Lodge the Deed for Duty (Where Required)
Whether the trust deed needs to be lodged with a state or territory revenue office, and what duty applies, varies between jurisdictions and changes from time to time. In New South Wales, for example, an instrument that establishes a trust over non-dutiable or unidentified property is liable to a fixed duty under s 58 of the Duties Act 1997 (NSW), and a declaration of trust over dutiable property such as real estate can attract ad valorem duty instead, as Revenue NSW's guide to establishing a trust explains.
Other states and territories apply different rules, and some impose no duty on a standard discretionary trust deed settled with a nominal sum. The safe approach is to check the current position with your state or territory revenue office before the deed is finalised, and to diarise any lodgement deadlines so the deed does not sit un-lodged.
Where Setups Stall
The same handful of problems cause most delays, and they are all preventable:
- Governance decisions left open: distribution and control rules that are still being debated when the deed is drafted mean the deed is drafted twice, or varied shortly after execution.
- Director ID missing: a director identification number must be obtained before a company is registered, and a missing one stalls incorporation.
- Incorrect execution: a deed signed without proper witnessing, or without following s 127 for a company trustee, may need to be re-executed, and banks will often refuse to accept it.
- Bank verification: KYC checks routinely take longer than expected, especially for a newly incorporated trustee, so factor the bank's timeline into the plan.
- Stamping assumed away: ignoring duty requirements in your state can mean late-duty exposure and last-minute admin when the revenue office queries the deed.
Where a Lawyer Helps
The steps above are sequential, but a lawyer compresses the timeline by getting the decisions right before documents are drafted and by working the registrations in parallel with the drafting. In a typical setup, a legal practitioner will:
- Advise on whether a discretionary or unit trust suits the business, and whether an individual or corporate trustee is appropriate given the assets involved and the need for asset protection.
- Draft a bespoke trust deed that reflects the business's actual activities, powers and distribution plans, rather than a generic template that may not fit.
- Oversee execution, including s 127 signing where the trustee is a company, so the deed does not need to be re-executed.
- Advise on duty in the relevant state or territory and arrange lodgement with the revenue office.
- Sequence the ASIC, ABN and banking steps, and troubleshoot rejections or missing documents as they arise.
- Prepare the supporting governance documents that co-founders or investors will expect, such as a shareholders agreement for the trustee company or a unit holders agreement for a unit trust.
Getting a lawyer involved before the deed is drafted is what keeps the whole timeline short, because the drafting is the step that everything else waits on.
Why the Trust Deed Sets Your Timeline
The single factor that decides whether your setup runs to days or to weeks is the trust deed: how quickly the governance decisions behind it are settled, how fast it can be drafted, and whether it is executed correctly the first time. Everything else, the company registration, the ABN, the bank account, hangs off that one document. A deed that has to be re-executed, or amended because the distribution rules were never settled, costs more time than any registry processing delay, and it is the one step where professional help pays for itself.
Setting up a trust in Australia is a short process when the groundwork is done. Settle the trust type, trustee and appointor first, incorporate the trustee company if you are using one, draft and execute the deed properly, register the ABN and TFN, and open the bank account in parallel where you can. Most businesses can move from decision to a working trust within a week, and a lawyer can usually compress that further by drafting the deed while the registrations are being processed.