Family trusts are one of the most common structures used by Australian families to hold investments, run businesses, and protect wealth. They are flexible, tax-effective, and – when managed carefully – provide a mechanism for long-term succession planning.
Therefore, it is not unusual for us to be asked:
“Should I involve my children in the control of my family trust?”
There isn’t a universal answer. It depends on your family dynamics, your goals, and how much responsibility you want the next generation to shoulder. Here, we unpack what ‘control’ means and explore the risks and opportunities.
Understanding ‘control’ in a family trust
Many people assume that the beneficiaries are the ones with power in a trust. That’s not the case. In fact, beneficiaries generally have no automatic right to income or assets, although each has an equitable chose in action in relation to the trusts, namely the right to the proper administration of the trusts, the right to be given due consideration as a potential object of the trusts’ benefaction, and the right to enforce those interests.
The power to make decisions sits elsewhere:
- Trustee: This is the decision-maker of the trust. If individuals are trustees, they carry direct responsibility. If the trustee is a company, the directors make decisions about distributions, investments, and day-to-day management.
- Shareholders of the trustee company: In a corporate trustee model, shareholders indirectly control the trust by deciding who sits on the board of directors.
- Appointor: The most powerful role. The appointor can hire and fire the trustee, which means they ultimately decide who manages the trust.
- Principal or Guardian: In some trusts there is a ‘veto’ power that rests with the principal or guardian. One common power of veto is over who can be appointed trustee.
What makes this structure unique is that these roles can be worn by one person or divided among several people. A parent may, for instance, be both appointor and shareholder of the trustee company, while their children are directors. Alternatively, one sibling may hold the appointor role, while another is a trustee.
This layering allows families to design the trust to reflect their circumstances: keeping tight control in one generation, gradually handing it over to the next, or distributing authority across multiple people to avoid concentration of power. However, it also means that if roles aren’t thought through, there’s a risk of deadlock, disputes, or unintended shifts in control. The ‘who wears which hat’ question is therefore critical in family trust planning.
For more insight we recommend you read our booklet ‘Controlling a Family Trust When You Die’.
What involving children in the control of the trust looks like
There are several ways families start this process, often gradually:
Directors of the trustee company: A common first step. Parents remain appointors and majority shareholders but give children a ‘seat at the table’ as directors.
Shareholders: Giving the children shares in the trustee company gives children the ability to appoint or remove directors. This can be a powerful strategy if parents want to secure continuity of management, however, this strategy also gives children the ability to override parents if the shareholding balance allows.
Appointor role: The most sensitive decision. Naming children as appointors – now or in the future – gives them ultimate power. Sometimes this is staggered (e.g., appointors act jointly with parents until the parents’ death or incapacity).
Combination roles: Some families layer involvement, e.g., children as directors but parents retaining appointor powers and controlling shareholding. This is often the ‘best of both worlds’ for families still wanting oversight.
Reasons families choose to involve children
There are strong arguments in favour of giving children some role in trust control:
Succession planning: If a trust owns the family business or investment portfolio, you want to avoid a leadership vacuum if something happens to you.
Education and experience: Being a director or trustee is a practical way for children to learn about financial management, governance, and legal duties.
Alignment with the family vision: If the trust is central to the family’s wealth plan, having children involved ensures they understand how decisions are made and what values guide the family’s financial legacy.
Intergenerational fairness: Where multiple children are beneficiaries, giving them a voice in control can prevent disputes about ‘favouritism’ in distributions or decision-making.
Risks and challenges to be aware of
On the other hand, bringing children into control is not without risk. Some of the key challenges include:
Loss of parental control: Once children are directors or shareholders, their decisions carry legal weight. They could, in some scenarios, outvote you.
Family conflict: If you bring in some children and not others, disputes can arise. Conversely, giving all children equal say, may slow down decision-making and lead to stalemates.
Liability: Trustees and directors have legal duties. If the trust runs a business and something goes wrong (e.g., tax debts, trading while insolvent, fatal accident), children can be personally liable.
Family law exposure: If a child divorces, their role as a controller (director, shareholder, or appointor) may bring the trust into their property settlement negotiations.
Readiness and maturity: Not every child is ready for the responsibility. Sometimes children lack the financial literacy, interest, or judgment to manage these roles wisely.
Examples in practice
The gradual transition: One family business client appointed their eldest son as a director of the trustee company while keeping appointor powers with the parents. This allowed the son to be involved in business decisions but kept ultimate control with the parents until they were confident he was ready to lead.
The “all in” approach gone wrong: Another client made all three adult children equal directors and shareholders of the trustee company. Within two years, disagreements about business direction had created a deadlock, with decisions delayed and legal costs rising.
The succession safety net: In one estate plan, the appointor role was structured so the parents acted as sole appointors during their lifetime, but upon their death, the role passed to two children jointly. This provided for continuity while avoiding an immediate handover.
Finding the right balance
For most families, the best approach is a staged or tailored transition:
Start small: Make children directors before handing over shareholding or appointor powers.
Match roles to skills: If one child is involved in the business and others are not, consider differentiated roles.
Review the trust deed: Many deeds limit or expand how control can be structured. Tailoring may be required.
Use agreements: Shareholder agreements or family constitutions can help set rules about decision-making, dispute resolution, and responsibilities.
How we can help
Involving children in the control of a family trust can strengthen succession planning, protect the family legacy, and give the next generation the skills they need to manage wealth. However, it must be done carefully. Too much control, too soon, can create conflict, risk exposure, or unintended legal consequences.
We work with families to design structures that balance protection, education, and succession. Whether you’re ready to bring your children into control or just thinking about the future, the key is to plan ahead and put the right safeguards in place.
Contact us on 1300 654 590 or by email to discuss your family trust structure and how to prepare for the next generation.
To learn more about control and succession of a family trust, read our booklet: ‘Controlling a Family Trust When You Die’.
The information contained in this post is current at the date of editing – 8 October 2025
