{"id":20248,"date":"2026-10-31T13:14:27","date_gmt":"2026-10-31T02:14:27","guid":{"rendered":"https:\/\/chuatan.com.au\/?p=20248"},"modified":"2026-10-31T13:22:19","modified_gmt":"2026-10-31T02:22:19","slug":"family-office-lawyer-australia-legal-issues-trust-companies","status":"publish","type":"post","link":"https:\/\/chuatan.com.au\/en\/family-office-lawyer-australia-legal-issues-trust-companies\/","title":{"rendered":"Family Office Lawyer Australia: Legal Issues for Family Offices"},"content":{"rendered":"
\n

This guide is written for family office principals, chief executives and trust officers: in Australia, and in Singapore, Hong Kong, Kuala Lumpur and elsewhere in Asia, where the families you serve have Australian residents, assets or beneficiaries.<\/p>\n

Family offices are rarely set up with Australian law as the starting point. A founder may move to Sydney, a child may settle in Melbourne, or the investment team may begin buying Australian property. Each step can bring a different body of Australian law into play. Below are the issues we most often help family offices and trust companies identify and manage, explained in general terms.<\/p>\n\n

Structure and residency<\/h2>\n

Decisions made in Australia for offshore entities<\/h3>\n

A foreign company may be treated as an Australian tax resident if its central management and control is exercised in Australia. Since the High Court’s decision in Bywater and the ATO’s ruling TR 2018\/5, the focus is on where high-level decisions are actually made, not where board meetings are held. A trust may also be a resident trust estate if its central management and control is in Australia. An Australian-based family office that in practice directs offshore companies and trusts can therefore change their tax position without anyone intending it.<\/p>\n

Attribution to Australian residents<\/h3>\n

Australian residents who control foreign companies, or who have transferred value to foreign trusts, may be taxed on some of those entities’ income before anything is distributed, under the controlled foreign company and transferor trust rules. Whether these rules apply depends on control, the type of income and the history of transfers, and needs advice from a registered tax agent working with the lawyer.<\/p>\n\n

Regulation<\/h2>\n

Financial services licensing<\/h3>\n

Australia has no single, dedicated licensing exemption for single family offices of the kind some Asian centres offer. Whether an Australian financial services licence is needed depends on what services are provided, to whom, and whether any exemption, such as the exemption for services provided only to related bodies corporate, applies on the facts. A multi-family office may sit differently. This needs to be verified for each structure.<\/p>\n

AML\/CTF reforms for trust and company service providers<\/h3>\n

From 1 July 2026, the AML\/CTF regime extends to “Tranche 2” entities, including trust and company service providers. Services such as acting as trustee, arranging for someone to act as director, providing a registered office or helping form entities may be designated services when provided in the course of a business. Trust companies, and family offices that provide these services, need to consider whether they are reporting entities and what customer due diligence, reporting and enrolment obligations follow.<\/p>\n

Privacy<\/h3>\n

Family offices hold sensitive information about health, family relationships, wealth and children. Whether the Privacy Act applies depends on the entity and its activities, as some smaller businesses are exempt. Since June 2025 there has also been a statutory tort for serious invasions of privacy, which can apply more broadly. Information sharing among family branches and advisers needs deliberate rules.<\/p>\n

CRS reporting<\/h3>\n

Under the Common Reporting Standard, a trust or company managed by a financial institution and earning mainly investment income may itself be a reporting “investment entity”. Classification determines who reports what about the settlor, beneficiaries and controlling persons, and errors can be repeated across many entities.<\/p>\n\n

People<\/h2>\n

Directors of private trust companies and corporate trustees<\/h3>\n

Directors of a trustee company can be personally liable for trust debts in some circumstances, face conflicts when they are also beneficiaries, and depend on the trust’s right of indemnity and on insurance. Indemnity deeds, access to records and D&O cover are worth reviewing before an appointment. Our separate article on directors of corporate trustees explains these duties in more detail.<\/p>\n

Employing family members<\/h3>\n

Family members working in the office are employees in law, with Fair Work, superannuation and tax consequences. Pay that exceeds the value of the work may raise tax questions, and an informal arrangement can become difficult if the relationship breaks down.<\/p>\n

Delegations and controls<\/h3>\n

Written delegations of authority and maker-checker controls protect both the family and staff. Our separate article on family office governance discusses these controls.<\/p>\n\n

Family governance<\/h2>\n

Constitutions, councils and binding documents<\/h3>\n

A family constitution or council charter usually carries moral rather than legal force. The parts that must bind need to be given effect through bridging documents: trust deed amendments, shareholders’ or unitholders’ agreements, company constitutions and board-adopted policies. Not everything should be binding.<\/p>\n

Next-generation education<\/h3>\n

Preparing the next generation to understand their roles as beneficiaries, directors or appointors can reduce later conflict.<\/p>\n

Succession of control roles<\/h3>\n

Control usually runs from the appointor or protector, to the trustee company, to its shares and board. Each role needs a successor mechanism that works on death, incapacity, divorce or emigration. Gaps in the chain often lead to disputes.<\/p>\n

Incapacity of the principal<\/h3>\n

An enduring power of attorney does not generally allow an attorney to act as a director or exercise personal trust powers. Whether a sole director’s incapacity freezes a company, or an appointor’s role passes on incapacity, depends on the constitution and deed.<\/p>\n\n

Investments<\/h2>\n

Unit trusts, limited partnerships and managed investment schemes<\/h3>\n

Pooled vehicles raise questions about fixed trust status, tax treatment of corporate limited partnerships, and whether a pooled arrangement is a managed investment scheme that needs registration or licensing.<\/p>\n

Direct property<\/h3>\n

Foreign persons, which can include trusts and companies with foreign interests, may need foreign investment approval, and a temporary ban on foreign purchases of established dwellings applies. States also impose foreign purchaser duty and land tax surcharges, and a trust deed’s terms can affect whether a trust is treated as foreign.<\/p>\n

Private lending<\/h3>\n

Lending to family members or third parties raises questions of credit licensing, security, enforceability, tax and AML\/CTF obligations, as well as how a loan will be treated in a divorce or estate.<\/p>\n

Co-investment among family branches<\/h3>\n

When branches invest together, agreements on contributions, decision-making, deadlock, exit and valuation can prevent disputes later.<\/p>\n\n

Estate and cross-border succession<\/h2>\n

Several issues recur for families with Australian connections: multiple Wills that must not revoke each other; Australian probate or resealing of a foreign grant, which is available only for some countries; family provision claims, including NSW notional estate, which can reach assets outside the estate; superannuation, which generally passes outside the Will; and distributions from foreign trusts to Australian-resident beneficiaries, which may be taxed under section 99B. Our article for private bankers and trust officers discusses these from the adviser’s side.<\/p>\n\n

Philanthropy<\/h2>\n

Private and public ancillary funds, renamed private and public giving funds from 1 October 2026, are regulated vehicles with rules on trusteeship, investment, distributions and governance. Further changes have been announced. Philanthropy can also be linked to the family’s governance and next-generation plans.<\/p>\n\n

Disputes<\/h2>\n

Disputes tend to arise from a small number of issues. Beneficiaries may request trust documents and reasons, which trustees must handle with care. Trustee decisions may be challenged for inadequate consideration or improper purpose. Trustees can seek judicial advice from the court to protect themselves when facing a difficult decision. Well-drafted mediation and dispute resolution clauses can keep disagreement out of court. Where an offshore trust has an Australian connection, an Australian court may still make orders affecting it, as our article on Australian courts and offshore trusts explains.<\/p>\n\n

How we work with family offices and trust companies<\/h2>\n