A proprietary limited company is recommended as the trustee of a family discretionary trust.

A proprietary company is preferred to an individual trustee or trustees because:

• a proprietary company with limited liability can extend limited liability to the trust as discretionary beneficiaries are generally not liable to trust creditors under the trust deed;
• the directors of a corporate trustee are generally not liable to trust creditors as the trustee is entitled to be fully indemnified from trust property under the trust deed: see section 197 of the Corporations Act 2001;
• significant costs of transfers of property and obligations, which can  outweigh the costs of forming and keeping a proprietary company to act as corporate trustee, can be incurred when there is a change of trustee: with a corporate trustee there is generally no need to change the trustee and changes in family individuals involved can be accommodated by a change in directors of the company;
• there is less difficulty administratively keeping the property and affairs of the trust separate and distinct from the activities of the principal beneficiaries because the activities of the trust are clearly carried on the name of the corporate trustee; and
• where the trust holds dutiable property in New South Wales, the dutiable property of the trust can be fully dutiable on a change of trustee with concessional duty under sub-section 54(3) of the Duties Act (NSW) 1997, say to change to a corporate trustee at a later date, denied because variation of the trust deed can be problematic in complying with paragraphs 6 and 8 of NSW Revenue Ruling DUT 037.