Is a family trust still worth having in 2027?
The answer is yes—but not for everyone, and certainly not for the reasons they were once established.
The best trust structures today are designed around your long-term goals, not simply to minimise tax.
Why Family Trusts Continue to Play an Important Role
Despite ongoing speculation about legislative change, discretionary family trusts remain a valuable planning tool for many Australians.
When structured correctly, a trust can help:
- Protect family assets from business or personal risk
- Provide flexibility when distributing income
- Hold investment assets for long-term wealth creation
- Assist with succession planning
- Support intergenerational wealth transfer
- Separate ownership from personal assets
However, the effectiveness of a trust depends on how it is established, administered and reviewed over time.
A trust that suited your circumstances ten years ago may no longer be the best fit today.
The Current Landscape: More Scrutiny, Not Less
While family trusts remain perfectly legitimate structures, the regulatory environment has become significantly more complex.
Over recent years we’ve seen:
- Increased ATO focus on trust distributions
- Expanded compliance obligations
- Greater scrutiny of unpaid present entitlements (UPEs)
- Tighter rules surrounding reimbursement agreements
- Ongoing review of trust taxation by government
The message from regulators is clear:
Trusts must reflect genuine commercial and family purposes—not simply tax outcomes.
Families relying on historic strategies without regular review may be exposing themselves to unnecessary tax risk.
Trust Reform: What Could Change?
Successive governments have periodically considered reforms to the taxation of discretionary trusts.
While no major overhaul has occurred, discussions continue around:
- Simplifying trust taxation
- Greater transparency of beneficiaries
- Limiting income-splitting opportunities
- Aligning trust reporting with broader tax integrity measures
No one can accurately predict future legislative changes.
What we can say is that structures built solely for tax minimisation are becoming increasingly vulnerable.
By contrast, trusts established for genuine wealth protection, succession planning and investment flexibility continue to provide significant benefits.
Distribution Planning Is No Longer a Last-Minute Exercise
One of the biggest mistakes we see is treating trust distributions as something to deal with in June. Effective distribution planning should happen throughout the financial year.
This allows families to consider:
- Expected taxable income
- Changes in family circumstances
- Beneficiaries’ marginal tax rates
- Capital gains
- Franked dividends
- Cash flow requirements
- Future investment objectives
Waiting until year-end often limits your options and increases the risk of unintended tax outcomes.
Strategic planning creates better decisions—not rushed ones.
Understanding Corporate Beneficiaries
Corporate beneficiaries can still be useful in the right circumstances, particularly where there is a genuine commercial reason for retaining profits in a company. However, proposed trust tax changes could make them less effective as a tax planning tool and may require a fresh look at existing “bucket company” strategies.
They can:
- Retain profits within a corporate tax environment
- Improve cash flow flexibility
- Assist with longer-term investment planning
- Support wealth accumulation strategies
Under the proposed rules, discretionary trusts may be required to pay a minimum 30% tax at the trustee level from 1 July 2028. Individual beneficiaries may receive a non-refundable credit for tax already paid by the trustee, but corporate beneficiaries may not receive that credit.
This could create a double taxation outcome. In simple terms, the same trust income may be taxed once in the trust and again in the company, without the company receiving a credit for the tax already paid by the trustee.
For families that have historically used a “bucket company” to cap tax outcomes at the company tax rate, this may materially reduce the benefit of that strategy and change the after-tax position of the wider group.
For example, if a family trust allocates $100,000 of income to a corporate beneficiary, the trustee may first pay $30,000 of tax under the proposed minimum tax rules. If the company is then also assessed on the $100,000 distribution without receiving a credit for the trustee tax, the same income may effectively be taxed twice. The exact outcome will depend on the final legislation and the group’s broader tax position.
In addition, the rules surrounding corporate beneficiaries have become considerably more complex.
Issues such as:
- Division 7A
- Unpaid present entitlements (UPEs)
- Loan agreements
- Benchmark interest rates
- Timing of payments
must all be carefully managed.
Using a corporate beneficiary simply because “that’s what we’ve always done” is no longer enough.
Each arrangement should be reviewed to ensure it remains compliant and commercially appropriate.
Before relying on a corporate beneficiary in future distribution planning, families should model the expected outcome and consider whether the structure still supports their commercial, asset protection and succession objectives once potential double taxation, compliance costs and cash flow impacts are taken into account.
Is Your Trust Still Fit for Purpose?
Many trusts were established decades ago when circumstances looked very different. Since then, you may have started a business, acquired investment properties, built substantial wealth, welcomed new family members, retired, sold a business, changed residency or adopted new investment structures. Yet despite these significant life and financial changes, many trust deeds remain untouched.
That can create a disconnect between what the trust was originally designed to achieve and what your family needs today. A trust that was appropriate ten or twenty years ago may no longer provide the same level of flexibility, asset protection or strategic benefit.
A comprehensive trust review should consider whether the trust still aligns with your current objectives, whether the deed provides sufficient flexibility for future planning, whether distribution strategies remain appropriate and tax-effective, and whether succession arrangements have been properly documented. It should also assess whether the trust continues to meet its original asset protection goals and support your family’s long-term wealth planning strategy.
This version reads more like expert advice and is easier to consume than two long bullet-point lists.
Has Your Trust’s Purpose Changed?
Recent Australian tax reform announcements have proposed a 30% minimum tax on discretionary trust taxable income from 1 July 2028, alongside proposed changes that may affect how net capital gains are taxed or distributed through trusts. These rules could significantly change the way family trusts are taxed and reduce some of the flexibility that made discretionary trusts attractive in the past.
As a result, trustees should revisit the original purpose of the trust. Was it established primarily to hold assets over the long term, protect family wealth and support succession planning? Or has its role shifted toward managing annual distributions, streaming income and capital gains, or supporting business and investment cash flow?
If the trust’s purpose has changed, the structure may need to change with it. A family trust that was once appropriate for holding long-term assets may not deliver the same outcome if it is now being used mainly as a trust distribution or streaming vehicle. Similarly, a trust used to manage distributions must have a deed, governance process and tax strategy that support that purpose under the proposed rules.
This does not mean every trust should be wound up or restructured. It does mean trustees should ask whether the trust still has a clear commercial and family purpose, and whether that purpose remains strong enough once the proposed tax changes, compliance obligations and future family objectives are considered.
A trust should evolve as your family and wealth evolve.
The Right Structure Depends on Your Goals
One of the biggest misconceptions is that every successful family should have a trust.
That’s simply not true.
The right structure depends on factors including:
- Asset protection requirements
- Investment strategy
- Family dynamics
- Estate planning objectives
- Business activities
- Tax position
- Future succession plans
For some families, a discretionary trust remains ideal.
For others, companies, SMSFs or direct ownership may form part of a more appropriate overall structure.
The key is ensuring every entity has a clear purpose.
Trusts Are About More Than Tax
The conversation around trusts often focuses on tax savings. In reality, the most successful wealth structures are designed to achieve much broader objectives. A well-structured trust can help preserve family wealth, protect assets from personal and business risks, manage investment risk and provide flexibility as family circumstances evolve. It can also support effective succession planning and facilitate the transfer of wealth to future generations.
Tax is simply one component of a much larger strategic picture. Family trusts remain one of the most effective wealth planning vehicles available—but only when they are aligned with your long-term objectives and regularly reviewed as those objectives change.
As tax rules evolve and compliance expectations increase, the question is no longer simply, “How do I pay less tax?” A better question is, “Does my structure still support where my family is heading?”
The answer could shape your family’s financial future for decades to come.
How New Leaf Advisory Can Help
At New Leaf Advisory, we help families, business owners and investors look beyond annual tax returns to ensure their structures continue to support their long-term goals.
Whether you’re establishing a new trust, reviewing an existing structure or planning for the next generation, our advisors provide strategic advice tailored to your circumstances.
A well-designed trust isn’t about following trends—it’s about ensuring your wealth is protected, your family is prepared and your structure is built for the future.
Frequently Asked Questions
Are family trusts still tax effective in Australia?
Yes, family trusts can still provide tax planning opportunities, but they must be used appropriately and in accordance with current tax laws. Tax should never be the sole reason for establishing a trust.
Can trust distributions be changed after 30 June?
Generally, trust distribution decisions must be made before the end of the financial year (or earlier if required by the trust deed). Failing to do so can have significant tax consequences.
What is a corporate beneficiary?
A corporate beneficiary is a company that receives trust income. It can provide planning opportunities in certain circumstances but comes with strict compliance requirements, including Division 7A considerations.
Could corporate beneficiaries be double taxed under the proposed trust tax changes?
Potentially, yes. The proposed rules indicate that discretionary trusts may pay a minimum 30% tax at the trustee level, while corporate beneficiaries may not receive a credit for that tax. This could mean income distributed to a company is taxed in the trust and then again in the company. The final position will depend on the legislation once enacted, so existing corporate beneficiary arrangements should be reviewed before the proposed commencement date.
Does the proposed 30% minimum tax mean I should wind up my family trust?
Not necessarily. A family trust may still be appropriate for asset protection, succession planning, investment flexibility and intergenerational wealth transfer. However, the proposed 30% minimum tax on discretionary trusts means trustees should undertake a trust review before making future distribution, restructuring or wind-up decisions.
Should I review my family trust?
Absolutely. If your trust hasn’t been reviewed in several years, or your financial circumstances have changed, is worth assessing whether your structure still aligns with your objectives.
Important note:. The proposed trust tax changes discussed in this article are not yet law and may change as legislation is developed. This article provides general information only and should not be relied on as tax, legal or financial advice. Trustees should obtain advice specific to their family trust, discretionary trust deed, beneficiaries and broader wealth structure before making any change