Corporate Trustee vs Individual Trustee: What’s the Difference?
Jul 22
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When setting up a trust, one important decision is whether to appoint an individual trustee or a corporate trustee. Both options have pros and cons that affect cost, liability, administration, and succession. This guide breaks down the key differences to help you make an informed choice.
What is an Individual Trustee?
The trustee role is held by one or more natural persons in their personal capacity.
Key Features
Ownership: Assets are legally owned in the individual trustees’ names.
Setup Costs: Generally cheaper, since no company registration is needed.
Ongoing Costs: Lower, with no annual ASIC fees.
Administration: Simpler paperwork, but can get complicated if trustees change (e.g., due to death or incapacity).
Liability: Personal liability—trustees are personally liable for trust debts (though usually indemnified by trust assets if the trustee has acted properly).
Succession: Changing trustees requires updating legal ownership records (e.g., property title transfers), which can be time-consuming and incur stamp duty in some jurisdictions.
What is a Corporate Trustee?
A corporate trustee means a registered company acts as the trustee instead of individuals.
Key Features
Ownership: Assets are owned in the name of the company as trustee.
Setup Costs: Higher, due to ASIC company registration.
Ongoing Costs: Annual ASIC fees and company administration costs.
Administration: Cleaner process — if directors change, the company remains the trustee, avoiding asset transfer.
Liability: Limited liability—the company is liable, and directors generally aren’t personally liable (unless they breach duties).
Succession: Much simpler—changing directors or shareholders doesn’t affect ownership of trust assets.
Quick Pros & Cons Comparison
Aspect | Individual Trustee | Corporate Trustee |
Setup Cost | Lower | Higher |
Ongoing Cost | Lower | Higher (ASIC fees) |
Asset Ownership | In individuals’ names | In company name |
Succession | More complicated | Simpler (no need to transfer title) |
Liability | Personal liability | Limited liability |
Perception | Less formal | More professional appearance |
Real-World Examples
Family Trust: Often recommended to have a corporate trustee for clean succession and asset protection.
SMSFs (Self-Managed Super Funds): ATO statistics show many SMSFs use corporate trustees because of liability and administration benefits..
Unit Trusts for Business Ventures: Corporate trustee preferred for separation of personal and trust assets.
