Trust Basics

Trusts are created by a trust deed normally drafted by a lawyer.

The key people in a trust are the Settlor, the Trustees, the beneficiaries, and the appointer.


Settlor:               Gifts the original amount of money to the trust. Other people can become settlors if they also gift money to the trust.


Trustee              The trustees are appointed in the trust deed and are the people who make all trust decisions.


Beneficiaries     The people who ultimately receive the trusts assets and potentially interim distributions of both income and capital.


Appointer          The person named in the trust deed who has power to appoint the trustees.



Trusts normally acquire assets by way of outright gift or by transferring assets such as a house to the trust financed by a debt owed to the person transferring the asset. The debt back has historically been gifted to the trust at $27,000 per year but now may be gifted without limit.

The second way a trust acquires assets is by investing in income earning assets and accumulating the income earned.

Trusts also increase their wealth by the capital appreciation of the assets owned.


Gifting to a trust was limited to $27000 per person prior to 1 October 2011 with gifts  over $27,000 incurring “Gift Duty”.

Gift duty was abolished from 1 October 2011, so it is now possible to gift any amount to a trust without incurring Gift duty. See Background to Gift Duty