Advantages of investing within a discretionary trust for Australian families

In today’s dynamic financial landscape, Australian families seek robust strategies to safeguard their wealth while optimising growth opportunities. One such avenue that continues to garner attention is discretionary trust. With its flexibility and tax efficiency, investing within a discretionary trust presents a compelling proposition for families aiming to secure their financial future. Let’s delve into the advantages that this strategic investment vehicle offers! 

Asset protection

One of the foremost advantages of a discretionary trust is its ability to shield assets from potential risks and liabilities. By holding assets within the trust structure, individuals can safeguard their wealth against unforeseen events such as lawsuits, bankruptcy, or creditor claims. This protection extends to beneficiaries, ensuring that family assets remain secure for future generations. 

Flexibility in distribution

Unlike other trust structures, such as fixed or unit trusts, a discretionary trust provides unparalleled flexibility in distributing income and assets. Trustees have the discretion to allocate income and capital gains among beneficiaries according to their individual needs and circumstances. This flexibility enables families to adapt to changing financial goals, tax regulations, and family dynamics over time.

Tax efficiency

Effective tax planning is a cornerstone of wealth management for Australian families. Investing within a discretionary trust offers significant tax advantages, including the ability to distribute income to beneficiaries in lower tax brackets, thereby minimising overall tax liabilities. Additionally, the trust’s ability to utilise franking credits and capital gains tax concessions can further enhance tax efficiency, maximising after-tax returns for beneficiaries.

Estate planning benefits

Discretionary trusts serve as powerful estate planning tools, facilitating the seamless transfer of wealth across generations. Through careful trust structuring and beneficiary nominations, families can establish a comprehensive succession plan that minimises probate costs and ensures efficient asset distribution upon the trustee’s passing. This proactive approach to estate planning helps mitigate family disputes and provides peace of mind for trustees and beneficiaries alike.

Asset diversification

Diversification is key to building a resilient investment portfolio that can weather market volatility and economic uncertainties. Investing within a discretionary trust offers families the opportunity to diversify their assets across various asset classes, including equities, property, bonds, and alternative investments. By spreading risk across different asset categories, families can enhance portfolio stability and optimise long-term returns.


To see whether a trust is the right investment vehicle for your family, book a complimentary one-on-one meeting with a tax accountant at APS Tax on (03) 9322 2000.

Written by APS Senior Accountant, Stephen Fry. 

Stephen is an accountant with over 13 years of professional expertise in the areas of taxation and accounting. Currently serving as a senior tax accountant at APS Tax, Stephen offers comprehensive guidance and ensures compliance in all tax-related matters. He has developed a specialised focus in areas such as self-managed superannuation funds, cryptocurrency taxation and leveraging software and technology to assist clients in streamlining their processes. Beyond his professional pursuits, Stephen cherishes quality time with his family and enjoys unwinding on the golf course. On the weekends he also enjoys following the AFL and watching British comedy television.