Understanding Trusts in Western Australia: A Guide for Individuals and Business Owners

July 8, 2025

What Are Trusts?


A Trust is a legal arrangement where a person or entity (the Trustee) holds and manages assets for the benefit of others (the Beneficiaries). The Trustee is responsible for administering the Trust in accordance with its terms and in the best interests of the Beneficiaries. Trusts are commonly used for asset protection, estate planning, and business structuring in Australia.


Key Parties in a Trust


  • Settlor: the person who creates the Trust and contributes the initial assets.
  • Trustee: the individual or company responsible for managing the Trust assets.
  • Beneficiaries: the people or entities who benefit from the Trust.
  • Appointor: the person who has the power to appoint or remove Trustees.


How Can Trusts Benefit Individuals and Business Owners?


Trusts offer a range of advantages for both personal and business purposes:


1. Asset Protection

Trusts can help shield assets from creditors, lawsuits, or family disputes, as the assets are legally owned by the Trustee, not the individual.


2. Estate Planning and Succession

Trusts allow for the smooth transfer of wealth to future generations, helping to provide for minor or vulnerable Beneficiaries.


3. Tax Planning

Trusts can offer tax flexibility. Income generated by Trust assets can be distributed among Beneficiaries, potentially reducing the overall tax liability.


4. Business Structuring

Trusts are often used by business owners to separate business assets from personal assets, manage risk, and facilitate succession planning.


5. Privacy

Trust arrangements are generally private, unlike Wills which become public during probate.


How Are Trusts Created in Australia?


Establishing a Trust in Australia involves several key steps:


1. Decide on the Type of Trust

Common types include:
Discretionary Trust: Trustee decides how income/capital is distributed among Beneficiaries. Common for family Trusts.

Unit Trust: Beneficiaries hold fixed units, similar to shareholders in a company. Often used for business or investment purposes.

Testamentary Trust: created by a Will, comes into effect upon the Will-maker’s death.


2. Prepare a Trust Deed

A Trust deed is a legal document that sets out the terms and conditions of the Trust, including the powers of the Trustee and the rights of the Beneficiaries.


3. Settle the Trust

The Settlor provides the initial asset (often a nominal sum) to establish the Trust.


4. Appoint Trustees and Beneficiaries

The Trust deed will name the Trustees and Beneficiaries. The Trustee must accept their role and responsibilities.


5. Stamp Duty and Registration

In Western Australia, unlike some other Australian states, stamp duty is not payable on the mere execution of a Trust deed and it does not need to be stamped. Registration with the Australian Taxation Office (ATO) will be necessary if the Trust will have a Tax File Number or Australian Business Number.


6. Ongoing Compliance

Trustees must comply with the terms of the Trust deed and relevant laws, including annual reporting and tax obligations.


If you are considering establishing a Trust, Crabtree Legal can provide tailored advice to ensure your Trust is structured to meet your personal or business needs.

Protecting Your Children’s Inheritance from Divorce with Testamentary Trust Wills: The Bernard v Bernard Case

November 9, 2025
At Crabtree Legal, we understand that protecting your children’s inheritance from potential relationship breakdowns is a crucial concern for many families. The landmark Family Court of Australia decision in Bernard and Bernard [2019] FamCA 421 confirmed that testamentary trust Wills can be an effective tool in safeguarding a beneficiary’s inheritance from being divided upon divorce. Background of the Case In Bernard v Bernard, the husband’s late father created two discretionary testamentary trusts through his Will — one for his son and one for his daughter. The trusts operated as “mirror trusts”: each sibling was the trustee of the other’s trust but had no control over their own trust. The husband was the primary beneficiary of his trust, but the assets were legally owned and controlled by his sister as trustee. When the husband and wife later separated and divorced, the wife sought to have the husband’s inheritance held in the testamentary trust included in the matrimonial property pool for division. However, the husband argued that since he did not legally own or control the trust assets, and his interest was solely as a beneficiary dependent on the trustee’s discretion, the inheritance should be excluded from the property pool. Court’s Decision and Key Findings The Family Court ruled in favor of the husband, finding that the assets in the testamentary trust were not part of the matrimonial pool. The court’s key reasoning was that: The husband was not the settlor of the trust—the deceased father was. The husband had no legal ownership or control over the trust assets. The trustee (the husband’s sister) had complete discretion over income and capital distributions. The husband’s interest was discretionary and not guaranteed, meaning he could not compel distributions. The trust assets were inherited and not acquired during the marriage. This decision confirmed that a properly structured testamentary trust can protect a beneficiary’s inheritance from being divided upon divorce by separating legal ownership and control from mere beneficial interest. Why This Matters for Your Estate Planning Bernard v Bernard highlights how testamentary trust Wills can be used to safeguard your children’s inheritance from future relationship breakdowns, ensuring that inherited assets remain protected within the family and are not treated as divisible property in the event of a divorce. At Crabtree Legal, we specialise in Wills incorporating testamentary trusts and can provide tailored advice and drafting services to help you protect your family’s wealth across generations. Contact Crabtree Legal Today If you want to ensure your children’s inheritance is protected from a future divorce or relationship breakdown, contact Crabtree Legal today. We will guide you through establishing testamentary trust Wills that provide peace of mind and strong asset protection tailored to your family’s needs.

Thank You to The Executive Centre and Attending Business Leaders

October 17, 2025
Crabtree Legal extends our sincere thanks to The Executive Centre for graciously hosting yesterday's Member Showcase lunch event, where our Director, Jonathan Crabtree, had the pleasure of presenting to fellow business owners. The session explored the limitations of Artificial Intelligence (AI) in drafting key legal documents for start-ups and Small to Medium Enterprises (SMEs). Together, we examined common pitfalls that arise when relying solely on automated drafting tools, including the risks of incomplete agreements, unenforceable clauses, and loss of commercial protection. We are particularly grateful to the business owners and entrepreneurs who attended and contributed to the discussion. Your questions, insights, and shared experiences sparked an engaging and practical conversation about balancing technological progress with the value of tailored legal advice. At Crabtree Legal, we remain committed to helping Perth’s business community make informed decisions as they grow and protect their ventures. Events like this highlight the strength of collaboration between local professionals and the importance of thoughtful, legally sound documentation in every stage of business development. To learn more about how we assist start-ups and SMEs with business structuring, shareholder agreements, and contract reviews, please contact us.

The Benefits of Testamentary Trust Wills Explained

September 9, 2025
Testamentary Trust Wills provide significant benefits for individuals and families planning the distribution of their estates in Western Australia, particularly in terms of asset protection, tax efficiency, and supporting vulnerable beneficiaries. These trusts are established within a Will and become effective upon death, offering tailored advantages for diverse family circumstances. Key Benefits of Testamentary Trust Wills Asset Protection Safeguards inheritance from creditors, bankruptcy, and family law disputes by holding assets within a trust rather than direct ownership by beneficiaries. Shields assets from potential misuse or waste by beneficiaries with high-risk behaviours such as gambling, financial instability, or poor money management. Protects funds from being included in divorce settlements, ensuring they remain accessible only to intended family members. Tax Advantages Optimises tax outcomes by enabling income splitting among beneficiaries, especially those on lower marginal tax rates. Allows income distributed to minor children (under 18) via a testamentary trust to receive the full adult tax-free threshold (around $19,000–$22,000 per child annually, tax-free), compared to only about $500 in a standard family trust. Provides flexibility to defer tax liabilities for overseas beneficiaries by controlling the timing and distribution of income. Support for Vulnerable and Young Beneficiaries Helps ensure responsible use of inherited assets by enabling trustees to set age thresholds (e.g., 21, 25, or older) for the release of funds to younger beneficiaries. Allows creation of specialised trusts for beneficiaries living with disabilities, including Social Security Act 1991 (Cth) compliant Special Disability Trusts. Can provide long-term security for those who require ongoing support, such as family members with health challenges or special needs. Estate Planning Flexibility Highly customisable trusts can be tailored for one person, an entire family, or multiple generations, addressing complex family or blended family situations. Enables control over how and when assets are distributed, including restricting access to certain beneficiaries or protecting inheritance lines within families. Trustees are chosen to ensure accountability, oversight, and alignment with the intentions of the Will-maker, often with recommendations for two trustees to reduce risks. Who Should Consider a Testamentary Trust Will? Individuals leaving substantial estates (often $2,000,000 or more) including superannuation or life insurance. Estates intended to support minor children, vulnerable adults, or those likely to face relationship or financial risks. Families wishing to maximise tax savings and asset protection across generations. Crabtree Legal: Expert Guidance for Your Estate Plan Crabtree Legal offers tailored advice on testamentary trust Wills to protect your legacy and secure your family’s future. Whether you need a simple Will or a complex estate plan, we support business owners, families, and individuals through every stage of estate planning, succession, and trust creation. Feel free to contact Crabtree Legal for a personalised consultation to explore how a testamentary trust Will could benefit your unique situation.