What is a trust deed?
A trust deed is the legal document that creates and governs a trust. It sets out the trustee, beneficiaries, and powers – and it controls everything the trust can or can't do.
A trust deed is the foundational legal document that creates a trust. It names the trustee, identifies the beneficiaries, sets out the trustee’s powers, and defines how distributions work. Every trust runs on its deed – if the deed doesn’t allow something, the trustee can’t do it.
What a trust deed contains
The trustee (who runs the trust day-to-day). The appointor (who can replace the trustee, often the real source of control). The beneficiaries (who can receive distributions). The trust’s purposes. The trustee’s powers (investment, distribution, variation). The vesting date (when the trust must wind up).
Most modern Australian family trust deeds run to 30-60 pages of carefully drafted clauses.
Discretionary, unit, and fixed trusts
A discretionary trust gives the trustee broad power to choose distributions among a class of beneficiaries. A unit trust splits ownership into defined units (more like a company structure). A fixed trust pre-defines who gets what. Each is set up by a different style of deed.
Family trusts are usually discretionary. Investment vehicles are often unit trusts. Hybrid arrangements use combinations.
Why deed quality matters
A poorly drafted deed creates problems for decades. Limited variation power means you can’t update for tax law changes. Missing appointor succession means the trust drifts. Vague distribution clauses invite ATO scrutiny.
Most older Australian trust deeds were drafted before key tax reforms (1997 trust streaming, Bamford rules, anti-avoidance updates). Reviewing every 5-7 years is sensible.
Variation vs new deed
Most trusts can be amended through a deed of variation – if the deed itself contains a sufficient power of variation. If it doesn’t, you may need a new deed of settlement (which can trigger CGT and stamp duty issues). The first question in any review is: what does the variation power allow?
Summary
A trust deed is the legal document that creates and governs a trust. It sets out the trustee, beneficiaries, and powers – and it controls everything the trust can or can’t do.
Talk to Sam about your situation
If this article raised questions for your own circumstances, Sam Michele offers free 20-minute initial consultations. Learn more about our trust deed work, or book a consultation.
Related reading
- Family trust vs unit trust vs discretionary trust
- Trust deed amendments: when and how
- Trust deed work
Disclaimer: This article is general information only and does not constitute legal advice. Estate planning is deeply personal - every family's circumstances are different. For advice specific to your situation, please contact Rosewood Succession Solicitors.