A trust is a useful legal mechanism for achieving wide range of purposes. You can use many trust structures to your advantage for purposes such as:

• wealth management;
• investment;
• superannuation;
• carrying on a business; or
• provision for family during your lifetime or in the event of your death.

A trust comes into existence when a person known as the ‘settlor’ transfers legal title of certain property to a person or organisation known as ‘the trustee’. The trustee is then obliged to hold and manage that property for the benefit of one or more other parties known as ‘beneficiaries.’ While the trustee holds legal ownership of the trust assets, the beneficiaries are the real or equitable owners of those assets.

Equity is the area of civil law that is concerned with issues of fairness and justice. It allows the courts to intervene when something is done against “good conscience” if there is no remedy for this wrong under the common law. For example the law of equity will enforce the requirement that a trustee use their powers as legal owner of trust property only in the best interests of the beneficiaries. Equity protects the equitable interest of the beneficiaries in having trust property managed properly for their benefit.

In order to ensure that your trust is set up correctly and that it is appropriately managed there are some common legal requirements and procedures that you must be aware of. Some trusts such as superannuation trusts are regulated by statute. There are also state and territory laws regulating the obligations and responsibilities of trustees.

Disputes in this area of law are common especially regarding the ongoing management of trusts. When disputes occur they can often be accompanied by:

·         complicated and tense family dynamics;

·         concerns about taxation;

·         disagreement over the management of an estate upon the death of a loved one; or

·         improper management by a trustee to the detriment of beneficiaries.

This Legal Guide on Equity & Trusts provides basic information about how to establish a trust, the responsibilities of a trustee and the rights of a beneficiary of a trust. It was written in Victoria but may also be informative for people in other states and territories. Before making important decisions it is advisable to obtain legal advice specific to your situation. LegalEagle’s™ free directory profiles all lawyers in Australia. You can use it to Find a Lawyer near you.

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Warning: Information provided through LegalEagle™ is for general guidance. It is not legal advice. Laws and procedures referred to may change and differ between states, territories and nationally. There may also be important exceptions or qualifications. Only a lawyer providing formal legal advice can assess your particular circumstances to determine how the law will apply.