Trust

A trust is a legal arrangement in which trustees hold and manage property as legal owners on behalf of beneficiaries, who hold the beneficial interest.

The parties

• Settlor — the person who establishes the trust and transfers assets to it
• Trustees — the legal owners, who must act in the beneficiaries' best interests
• Beneficiaries — those entitled to benefit

Why property owners use them

Asset protection, succession planning, and separating legal from beneficial ownership. Historically also for tax purposes, though that advantage has narrowed considerably.

What changed under the Trusts Act 2019

Substantially increased obligations on trustees:

• Mandatory duties that cannot be excluded
• Presumption that beneficiaries are given basic trust information
• Record-keeping requirements
• 125-year maximum duration

Many trusts set up decades ago no longer serve their original purpose and now carry real compliance cost. Reviewing an existing trust is often worthwhile.

Common misunderstanding

A trust is not a tax shelter for rental losses. Ring-fencing applies regardless of ownership structure.

Trusts have their own bright-line considerations. Transfers into or out of a trust can be disposals for tax purposes and can trigger a bright-line event. Get advice before moving property.

A poorly run trust can be set aside. If trustees treat trust assets as their own — a "sham" or "alter ego" trust — courts can look through it, defeating the asset protection it was set up for.

Related terms

Sources

• Trusts Act 2019

Last reviewed: 1 August 2026 · General information only, not legal or tax advice.

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