Unit Trust Formation

A unit trust divides trust property into defined units, similar to shares in a company, and is a popular structure for co-investment – whether that’s siblings buying an investment property together, business partners running a joint venture, or investors pooling funds for a commercial property purchase. We help Melbourne clients set up unit trusts correctly from the outset.

When a Unit Trust Makes Sense

A unit trust suits situations where multiple parties want defined, proportional ownership interests that can be bought, sold or transferred relatively simply – unlike a discretionary trust, where beneficiaries don’t hold fixed entitlements. It’s commonly used for co-owned investment properties, joint ventures between unrelated parties, and situations where clear, trackable ownership percentages matter.

What’s Involved in Setting Up a Unit Trust

• Drafting the unit trust deed, setting out unitholder rights and trustee powers
• Deciding on a corporate or individual trustee
• Registering the trust for a TFN and ABN, and GST if required
• Issuing units to the initial unitholders
• Setting up appropriate record-keeping for unit registers and distributions

Unit Trust vs Discretionary Trust

The key difference is control and flexibility – a discretionary trust gives the trustee flexibility over how income and capital are distributed among a class of beneficiaries, while a unit trust allocates income and capital based on fixed unit-holding percentages. We help you decide which structure suits your specific situation, including whether a hybrid trust might be appropriate.

Corporate Trustee for Your Unit Trust

Many unit trusts use a corporate trustee for liability protection and continuity, particularly where the trust holds property or runs a business. We can set up the corporate trustee company alongside the trust as part of the same process.

Ongoing Compliance for Unit Trusts

Once established, a unit trust has ongoing obligations including annual tax returns, distribution statements to unitholders, and – if a corporate trustee is used – annual ASIC review fees. We help manage these obligations so your trust stays compliant year after year.

Frequently Asked Questions

What’s the difference between a unit trust and a discretionary trust?

A unit trust allocates income and capital based on fixed unit-holding percentages, while a discretionary trust gives the trustee flexibility to distribute among a class of beneficiaries each year.

Can I add or remove unitholders after the trust is set up?

Yes – units can generally be issued, transferred or redeemed after formation, though this may have tax and stamp duty implications that we’d review before any change.

Do I need a corporate trustee for a unit trust?

Not always, but it’s common for liability protection and continuity, particularly for trusts holding property or running a business. We can advise on whether it suits your situation.

How long does it take to set up a unit trust?

Setup can generally be completed within a few business days once we have the details of the unitholders and trustee arrangement confirmed.

What ongoing compliance is required for a unit trust?

Annual tax returns, distribution statements to unitholders, and (if using a corporate trustee) annual ASIC review fees are the main ongoing obligations.

How much does it cost to set up a unit trust?

Cost depends on whether a corporate trustee is used and the complexity of the unitholding arrangement. We provide a fixed quote before starting.

Related Trust & Structuring Services

See our general unit trust page for an overview of how this structure works, or trust setups for commercial property if property purchase is your main goal. If a company suits your co-investment better, see company formation.