Family Trust or Will? Comparing the Benefits for Queensland Estates
A family trust and a will aren’t alternatives to one another. They serve different purposes, deal with different assets, and can each play an important role in a Queensland estate plan.
Our team at https://www.securatorlegal.com.au has helped Queensland families sort through these decisions for years. And in this article, we’ll explain how each structure works and explore the key benefits of a family trust. We’ll then look at how to decide which combination best suits your estate.
Read on, and by the end you’ll have a much clearer picture of where to start.
What Is the Difference Between a Family Trust and a Will?
The main difference between a family trust and a will is when they operate and which assets they cover.
A family trust can hold and manage assets during your lifetime and continue after your death. However, a will only takes effect after you die and generally deals with assets you own personally.
The table below includes a simple comparison:
| Feature | Family Trust | Will |
| When it operates | During your lifetime and after death | Only after death |
| What it covers | Assets held in the trust deed by the trustee | Personally owned assets only |
| Probate required | No | Yes, through the Supreme Court of Queensland |
| Cost and complexity | Higher setup and ongoing compliance costs | Lower cost and simpler to maintain |
| Ongoing control | Appointor and trustee manage assets continuously | Executor administers estate once only |
| Legal document | Trust deed | Will |
As you can see from the table, these two structures are built for different jobs. A will only kicks in after you die and only covers assets you personally own at that point. But a family trust holds and manages assets through a trustee from the moment it’s set up.
Those trust assets sit completely outside your deceased estate. Your will can’t touch them, and they don’t go through probate either.
What Are the Key Benefits of a Family Trust?
The main family trust benefits for Queensland families include protecting assets, managing tax obligations and passing wealth between generations. These benefits can be particularly valuable for families with major assets, investments or business interests.
Let’s go through a breakdown of the five main benefits.
Asset Protection
Trust assets are protected from personal creditor claims because the trustee holds legal ownership. So if you’re sued personally, your trust property generally sits out of reach (the timing of asset transfers can be important here).
A corporate trustee strengthens that separation further by adding a distinct legal entity between you and the trust assets. That said, protection isn’t guaranteed. Courts and the Family Court can still scrutinise trust arrangements, particularly where the same person controls both the trust and its assets.
If you’re a doctor, business owner or other professional with greater exposure to personal liability, a family trust may provide an additional layer of asset protection.
Tax Distribution Among Beneficiaries
Distributing trust income to family members in lower tax brackets reduces your overall tax obligations. For example, a family with adult children in lower income brackets may be able to distribute trust income across multiple beneficiaries each financial year. Distributing the income in this way can reduce the amount allocated to a higher-income family member.
However, the Australian Taxation Office’s (ATO) Section 100A rules apply where someone else receives the practical benefit while the named beneficiary carries the tax liability.
To avoid potential issues, trust distributions should be genuine and properly documented. The funds should also be provided to, or genuinely applied for the benefit of, the beneficiary who’s been allocated the income.
Bypassing Probate
Did you know that trust assets bypass the Supreme Court probate process entirely? It gives beneficiaries faster access after death because there’s no waiting on a grant of probate. Plus, there are no executor affidavits and no publication of notices in the Queensland Law Reporter.
And unlike a probated will, trust arrangements aren’t filed with or searchable through the Supreme Court. That means your family’s financial affairs will stay private.
For high-value estates, avoiding probate can also help reduce the costs of administering the estate. These costs can include legal expenses and court filing fees that may add up to thousands of dollars.
Practical Tip: Keep an up-to-date copy of your trust deed and any amendments with your estate planning records. Missing trust documents can make the succession process more difficult for those taking over.
Ongoing Control Through the Appointor Role
The appointor role gives one person ongoing legal authority to oversee and change the trustee. That’s an important power. It means the right person can step in and redirect the trust if the trustee isn’t acting in the family’s best interests.
But this role needs to be carefully planned in advance. Appointor succession must be documented in the trust deed before death. Without it, control of the trust can become a source of costly family disputes, particularly where multiple family members believe they have a claim to that authority.
Flexible Wealth Distribution Across Generations
A trust deed can govern how assets are distributed across multiple generations of your family. The trustee has discretion to adjust distributions each year based on whoever has the greatest need at that time.
That flexibility is one of the structure’s main practical advantages. For example, a trustee can direct income towards a child starting a business one year and another facing medical costs the next (all without redrafting any legal documents).
Do You Need a Family Trust, a Will, or Both?
Most Queensland estates need both a family trust and a valid will to be fully protected. Each document covers different assets and serves a different legal purpose.
Here’s how to work out which structure fits your circumstances:
- Modest Estates: For a modest estate, a straightforward will combined with appropriate beneficiary nominations may be enough to meet your estate planning needs. If your assets are limited and your family arrangements are relatively simple, the setup and ongoing costs of a family trust may outweigh the benefits.
- Complex or Business Estates: Estates carrying business interests, investment properties, or serious income streams generally benefit from a family trust structure. Asset protection and tax distribution advantages tend to outweigh the setup and annual compliance costs at this level.
- Blended Families: Disputes can arise after death, particularly in blended families where children from different relationships have competing interests. A family trust can provide greater control over how and when beneficiaries receive distributions, which may help reduce the risk of future conflict.
- Superannuation Nominations: Your super fund requires a separate binding death benefit nomination regardless of your estate plan. Without one, the fund trustee will decide where your super goes, and that decision may not reflect your wishes.
- Dying Intestate: If you die without a valid will, your personally owned assets will generally be distributed according to Queensland’s intestacy rules. These rules are set out in the Succession Act 1981 (Qld) and generally apply to assets that aren’t held in a family trust.
- Both Together: Having both a family trust and a will can provide more complete estate planning. In practice, the trust will manage the assets it holds, while your will will deal with personally owned assets and can appoint guardians for your children.
We recommend consulting with a Queensland estate lawyer because they can assess your circumstances and recommend the combination that actually fits.
Family Trust or Will: Making the Right Call for Your Estate
A family trust and a will serve different roles in estate planning. A trust manages the assets it holds, while a will deals with personally owned assets outside the trust. Using both can provide broader coverage for your estate.
Plus, your circumstances will determine which structure you need, and in many cases, you’ll need both. The right combination depends on your assets, your family, and your long-term wishes.
Securator Legal offers a free phone consultation to help you work out exactly what your Queensland estate needs. Contact us today to get started.
