Buying property through a discretionary trust in South Australia – what you need to know

Buying property is a big decision with long-term financial and legal consequences. For many South Australians, using a discretionary trust—often called a family trust—can offer real benefits when it’s set up correctly from the start.

What is a discretionary trust?

A discretionary trust is a legal arrangement where a trustee owns property on behalf of a group of beneficiaries. The trustee decides how income and capital are shared among those beneficiaries, based on the rules in the trust deed.

In South Australia, discretionary trusts are commonly used for:

• Property investment
• Asset protection
• Managing family wealth
• Succession planning

Asset protection

If you own property in your personal name, it can be at risk if you face legal action or bankruptcy.

With a discretionary trust, the property is legally owned by the trustee—not the individual beneficiaries. While no structure offers complete protection, a trust can help separate personal risk from trust assets, especially if it’s set up well before any financial or legal trouble arises.

This is why many SA business owners and professionals use trusts to hold investment properties separate from their personal assets.

Flexibility for families

One of the biggest advantages of a discretionary trust is flexibility. The trustee can decide each year how to distribute income among beneficiaries. This can help families manage changing circumstances, such as:

• Blended families
• Long-term planning across generations

This flexibility isn’t always available if the property is owned in individual or joint names.

Tax planning

Income from property—like rent or capital gains—can be distributed to beneficiaries who are on lower tax rates, provided the trust complies with Australian tax law and the trust is being used for genuine family or business purposes. This can improve overall family tax efficiency.

Succession and estate planning

Property owned personally becomes part of your estate and can be delayed by probate or disputed.

Property in a discretionary trust:

• Doesn’t form part of a beneficiary’s personal estate
• Can continue without interruption after death
• Is controlled by the trust deed (usually through the appointor role)

For families wanting smooth succession and less complexity, trusts can be a useful tool.

Set it up before you buy

Transferring property into a trust after purchase usually triggers:

• Stamp duty
• Capital gains tax
• Possible refinancing issues

So, consider the structure before signing the contract, not after settlement.

Key takeaways

A discretionary trust can offer:

• Asset protection
• Flexible income distribution
• Tax planning opportunities
• Succession benefits

But it’s not right for everyone. The best structure depends on your goals, finances, and long-term plans.

Get in touch with the team at PGC Legal to discuss what’s right for you. We’re Adelaide-based lawyers and are here to help.

This is general information only and not legal or tax advice. Everyone’s situation is different—get professional advice before making decisions.