A corporate trustee is a company appointed to manage a trust, while an individual trustee is a person acting in that role. The key differences lie in liability, cost, and succession. Choosing the right trustee structure can impact how a trust is managed, protected, and passed on to future beneficiaries.
This article explores the benefits, risks, and key differences between corporate and individual trustees, including real-world examples from Australian trust law and SMSF administration. Whether you’re setting up a family trust, managing a unit trust, or looking to appoint a new trustee, this guide will help you make the right choice.
What is a trustee, and what do they do?
A trustee is the person or company legally appointed to manage the trust’s assets on behalf of its beneficiaries. The terms of the trust deed bind the trustee, who is responsible for ensuring the trust is managed according to Australian law.
The trustee’s main duties include:
- Managing the trust’s assets – Overseeing investments, distributions, and daily operations.
- Acting in the best interests of beneficiaries – Prioritising the needs and rights of those benefiting from the trust.
- Complying with the trust deed – Making decisions only within the legal powers granted by the deed.
- Maintaining accurate records – Keeping financial statements, tax records, and compliance documents up to date.
- Meeting legal and tax obligations – Including lodgement with the ATO and registration with ASIC for corporate trustees.
Whether the trustee is a company or an individual, their role is critical to the effective operation and trust management of structures like SMSFs, family trusts, and unit trusts.
What is a corporate trustee?
A corporate trustee is a company appointed to act as the trustee of a trust. It holds legal title to the trust’s assets and manages them according to the trust deed, acting on behalf of the beneficiaries. The company's directors make decisions, but liability rests with the company itself—a separate legal entity.
How a corporate trustee works
- A company is registered with ASIC to act as a trustee.
- Directors manage the trust’s obligations under the trust deed.
- Trust assets are held in the company’s name, not in individual names.
- The company remains the trustee even if the directors change.
- Used frequently in SMSFs, family trusts, and high-value asset structures.
Benefits of a corporate trustee
- Limited liability: Protects directors’ and shareholders’ personal assets.
- Succession planning: Easier transfer of control via director/shareholder changes.
- Asset protection: Clear separation between personal and trust assets.
- Continuity: The company remains a trustee through the death or incapacity of individuals.
- Professional management: Perceived as more formal and credible in legal and financial contexts.
A corporate trustee may have higher setup costs, including company registration and annual ASIC fees — but the asset protection and limited liability often outweigh the cost for long-term trusts.
What is an individual trustee?
An individual trustee is a person who is appointed to manage a trust and act on behalf of its beneficiaries. Unlike a company, an individual trustee is personally liable for the management of the trust’s assets and is directly accountable under the terms of the trust deed.
How an individual trustee works
- One or more natural persons are appointed to act as trustee(s).
- They hold legal title to the assets of the trust in their own names.
- Must manage the trust in line with trust law and the trust deed.
- New trustees must be appointed if an individual resigns, dies, or becomes incapacitated.
Benefits of an individual trustee
- Lower setup and admin costs: No need for ASIC registration or ongoing company fees.
- Simpler structure: Easier to understand and manage for low-risk or short-term trusts.
- Ideal for simple family trusts: Where control remains within a small family unit.
Limitations
- Personal liability: Trustees are personally responsible for the trust’s debts and obligations.
- Succession issues: The trust may become inactive or non-compliant if a trustee dies or can no longer act.
- Asset separation risk: Blurred lines between personal and trust assets can lead to legal complications.
Appointing an individual may be appropriate in specific circumstances, but it requires careful succession planning and an understanding of the trustee’s personal liabilities.
Individual vs corporate trustee comparison
When is an individual trustee the right choice?
An individual trustee may be suitable in certain situations, especially when simplicity, low cost, or minimal long-term complexity are key considerations.
- Cost-conscious clients – Ideal for those wanting to avoid ASIC fees or company registration costs.
- Simple or short-term trusts—This type of trust works well for basic family trusts or unit trusts with low risk and limited assets.
- Low administrative burden – Easier to manage without needing to maintain a separate company structure.
- Close-knit arrangements – When trustees and beneficiaries are the same individuals (e.g. small family trusts).
- No complex succession planning is needed – Where the trust is not expected to outlive the individual trustees.
Be aware: The individual trustee’s personal assets may be at risk if the trust faces legal or financial issues. Always review the terms of the trust deed before proceeding.
Common mistakes when setting up a trustee structure
Choosing the wrong trustee structure can lead to costly legal, financial, and compliance issues. Avoid these common pitfalls when setting up a family trust, SMSF, or unit trust.
Mistakes to avoid
Mixing personal and trust assets
Failing to separate ownership records can expose the individual trustee’s personal assets to liability or disputes.
Choosing a structure without professional advice
Every trustee structure has pros and cons — consulting a professional helps you make an informed decision.
Poor succession planning
If an individual trustee dies or loses capacity, the trust may become inactive or non-compliant until a new trustee is appointed.
Overlooking admin and compliance obligations
A corporate trustee must meet ASIC obligations. An individual trustee must also follow the trust deed and trust law — either can create issues if ignored.
Using a trustee who is also a beneficiary without checks
While this is allowed, it can raise legal concerns if not structured correctly.
Each of these errors can compromise the protection, operation, or legality of the trust’s assets — making it critical to choose the right structure from the start.
FAQs about trustees
What is the difference between corporate and individual trustees?
A corporate trustee is a registered company that manages the trust, offering limited liability and continuity. An individual trustee is a person who manages the trust and is personally liable for its obligations.
Is a corporate trustee better?
It depends on your situation. A corporate trustee offers better asset protection, continuity, and professionalism, but comes with higher setup and admin costs.
Do I need an ABN for a corporate trustee?
No. The trust needs an ABN, not the corporate trustee. However, the trustee company must be registered with ASIC and comply with corporate governance laws.
Can a trustee be changed after a trust is set up?
Yes. You can appoint a new trustee if allowed under the terms of the trust deed. This process differs for corporate vs individual trustees and often requires professional advice.
Choosing the right trustee structure
Whether you choose a corporate or individual trustee depends on your goals, the type of trust, and how you plan to manage the trust’s assets over time.
If simplicity and cost are key, an individual trustee may suit a smaller or short-term trust.
A corporate trustee offers clear advantages if you need asset protection, succession planning, or long-term stability.
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Need help choosing the right trustee structure?
Speak with a business advisor at Liston Newton for tailored guidance on setting up your trust and ensuring long-term compliance, protection, and control.
With decades of experience in trust structuring, tax strategy, and trust administration, Liston Newton can help you choose the best path forward — no matter your circumstances.
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