To close a family trust in Australia, the trustee follows the winding-up process in the trust deed: pay the trust’s debts, distribute what’s left to the beneficiaries, lodge a final tax return and formally record that the trust has ended. There’s no ASIC form for it. A trust is a relationship, not a registered entity, so you dissolve it by paperwork rather than by deregistration.
Most people put this off for years. The trust sits there costing an accountant’s fee every June, nobody can find the original deed, and the 2026 Budget’s proposed minimum tax on discretionary trusts has a lot of families asking whether theirs is still worth keeping. Here’s the good part. Closing one properly comes down to a checklist and a handful of decisions made in the right order.
- You close a family trust through its deed, not through ASIC. The deed decides who can end the trust, when, and who receives the assets.
- Check your vesting date before anything else. It’s capped at 80 years in most states. Queensland trusts created from 1 August 2025 can run for 125 years, and South Australia has no fixed limit.
- Tax gets sorted before anything leaves the trust. Final accounts, capital gains and any family trust election all need checking first, because the trustee is personally on the hook for unpaid tax.
- The 2026 Budget proposals may change your timing. A 30% minimum tax on discretionary trusts is proposed from 1 July 2028, with restructure rollover relief from 1 July 2027 to 30 June 2030. None of it is law yet.
- A company trustee doesn’t disappear when the trust does. You deregister it with ASIC as a separate step, or it keeps attracting annual fees.
What does it mean to close a family trust?
A family trust (also called a discretionary trust) exists because a trustee holds property for a group of beneficiaries. Once the trustee holds nothing on trust, and every obligation is wrapped up, the trust is over. Closing, dissolving, winding up and vesting all get used to describe this. In this guide, closing a family trust means the whole job, start to finish.
Here’s the distinction most people miss. Trust vesting is the moment the beneficiaries’ interests become fixed. It isn’t the moment the trust stops existing. The ATO’s ruling on trust vesting (TR 2018/6) makes the point clearly: a trust that has passed its vesting date but still holds assets is still a trust, and the trustee still has to administer it and lodge returns.
Which brings us to one of the most common searches on this topic: how to deregister a trust. You can’t. Trusts aren’t registered with ASIC, so there’s nothing to deregister. What you actually close are the registrations hanging off the trust (its ABN and any GST or PAYG registration), plus the trustee company if there is one.
Should you close your family trust now, or wait?
Two years ago this section wouldn’t exist. Now it’s the first question to answer.
The 2026-27 Federal Budget proposed a 30% minimum tax on the income of discretionary trusts from 1 July 2028. Treasury released exposure draft legislation on 3 September 2026. The draft includes temporary rollover relief for transfers made between 1 July 2027 and 30 June 2030, letting a trust move its assets into a company or fixed trust without immediate income tax or CGT. It also proposes an election that would let some existing trusts opt out of the minimum tax by fixing their distributions instead.
Two caveats. This is still draft law and could change before it passes. And the federal rollover deals with income tax and CGT only, so state stamp duty on moving assets is a separate question.
So should you close your family trust now? If it holds property or shares with a large unrealised gain, closing it in 2026 could lock in a CGT bill that a restructure inside the rollover window might defer. If it’s empty, waiting buys you nothing except another year of tax returns. Here’s our starting view on whether to close a family trust in your position.
| Your situation | Our starting view |
|---|---|
| Trust is empty or close to it, with no plans for it | Close it now. Every extra year costs a return and accounting fees. |
| Trust holds a business, property or shares with a big unrealised gain | Don’t close it yet. Get tax advice on whether a restructure from 1 July 2027 costs less. |
| Trust mainly splits income between adult family members | Model the proposed 30% minimum tax first, then compare closing, restructuring and the opt-out election. |
| Vesting date falls in the next few years | Act now. Any extension or early-vesting change has to happen before that date. |
| Beneficiaries or appointors disagree about the trust | Get legal advice before taking a step. Most closing routes need agreement or clear deed powers. |
Which way of closing a family trust fits your situation?
There are five routes to dissolve a family trust. In practice, almost every closure uses the first two.
Let the trust reach its vesting date
Every deed sets a vesting date, the latest day the trust can run. State law caps how far out that date can be.
| Where the trust is governed | Maximum life of the trust |
|---|---|
| NSW, VIC, WA, TAS, ACT, NT | 80 years |
| Queensland | 125 years for trusts created from 1 August 2025 (80 years for older trusts unless they’re extended) |
| South Australia | No fixed limit |
Waiting decades isn’t a plan for most families, and older deeds sometimes use odd formulas tied to the lives of named people. Read the definition in your deed rather than assuming 80 years.
Bring the vesting date forward
This is how most family trusts actually close. Many modern deeds let the trustee nominate an earlier vesting date, sometimes with the appointor’s written consent. If yours doesn’t, the deed may still let you add that power with a Variation of Discretionary Trust.
Timing is everything here. The ATO’s view is that once the vesting date passes, the deed can’t be varied to undo it. A variation that changes the trust too dramatically also risks being treated as a brand-new trust for tax purposes, so keep changes to what the closure needs.
Ask the beneficiaries to end it
An old English case, Saunders v Vautier, lets beneficiaries end a trust and take the property, but only if every beneficiary is an adult with legal capacity and together they’re absolutely entitled to everything. Plenty of articles imply one beneficiary can force the trustee’s hand. That’s wrong.
For a family trust, this route almost never works. The beneficiary class is wide and open-ended, and it typically includes children, future grandchildren and related companies. Unborn grandchildren can’t sign a consent.
Revoke the trust
A settlor or trustee can revoke a trust only if the deed expressly says so. Few family trust deeds include this power, partly because that power can see trust income taxed at the settlor’s rates under section 102 of the 1936 tax Act. No clause, no revocation.
Ask a court
Each state’s Supreme Court can make orders ending or administering a trust. It’s the most expensive route by a long way. People end up here when the trustee and appointor are deadlocked, the deed is lost and the trust still holds assets, or a beneficiary is challenging how the trust has been run.
How to close a family trust, step by step
Every deed is different, but the order below is how we’d close a family trust in most cases. Your accountant handles the tax pieces. The deed decides everything else.
1. Find the original deed and every variation
You need the signed original plus every later variation, because a variation from 2009 might be the one that changed who can vest the trust. Banks and duty offices often want originals too. Missing a variation is how plenty of closures stall halfway.
2. Confirm who has the power to act
Check whether the trustee can act alone or needs consent from the appointor. If the appointor has died, the deed usually names a successor or points to their legal personal representative. Sort this out first, since an unauthorised resolution can unwind everything that follows.
3. Get final accounts and a tax plan
Ask your accountant for up-to-date accounts and a closure tax plan before you set a date. When a beneficiary becomes absolutely entitled to an asset, or the trustee hands an asset over to end their interest, a CGT event happens (commonly event E5 or E7). Small business CGT concessions can help if the trust qualifies.
Watch the final-year distributions closely. If income is appointed to a low-tax beneficiary but the money ends up with someone else, the ATO can apply its reimbursement agreement rules in section 100A. And if the trust has made a family trust election, distributing to anyone outside the family group triggers family trust distribution tax at 47%.
4. Clear debts, loans and unpaid entitlements
Pay suppliers, lenders and the ATO, and set aside money for the final return. Then deal with loan accounts and unpaid present entitlements (UPEs), the distributions beneficiaries were promised but never received.
On 10 June 2026, the High Court ruled in Commissioner of Taxation v Bendel that a UPE owed to a company beneficiary isn’t a Division 7A loan just because it sits unpaid. That’s welcome news for many groups. It doesn’t make the UPE vanish, though. The trust still owes the money, and forgiving it has its own tax consequences, so get advice before anyone signs a forgiveness deed.
5. Pass the resolutions the deed requires
Document the decision exactly as the deed asks. Some deeds accept a trustee resolution to bring the vesting date forward. Others require a deed or a written instrument, and a minute won’t cut it. If the trustee is a company, the directors’ resolution needs to be properly recorded as well.
6. Distribute and transfer the assets
Assets either get sold and the cash distributed, or transferred to beneficiaries as they are (an in specie distribution). Land needs a title transfer and a duty assessment, shares need share transfer forms, and financed equipment needs the lender’s release. Stamp duty depends on the state and the asset, and it can apply to the full market value, so check it before you choose a method.
7. Lodge the final return and cancel registrations
Your accountant lodges the trust’s final tax return and marks it as final, and lodges a last activity statement if the trust is registered for GST. Then cancel the trust’s ABN, which also ends its GST registration. Don’t cancel the ABN while money is still moving through the trust.
8. Close accounts and tell people
Close the trust’s bank accounts once the last payments clear. Tell insurers, suppliers and anyone paying into the trust. A subscription or rent payment landing in a closed trust account months later is a surprisingly common headache.
9. Deal with the trustee company
If a company acted as trustee and has no other job, deregister the company through ASIC so the annual review fee stops. All shareholders need to agree, which you can record with a shareholders’ resolution to voluntarily deregister the company. Keep the trust’s records for at least five years after the final return.
How long does it take, and what drives the cost?
An empty trust with a tidy deed can close within a few weeks. Most of that time goes on preparing the final accounts and return. A company trustee adds time, because ASIC publishes a notice of proposed deregistration and the company is deregistered around two months later.
Most of the cost comes from complexity. The closing paperwork itself is the small part. These are the things that push it up.
| Cost driver | Why it adds work |
|---|---|
| Lost or incomplete deed | Someone has to rebuild the chain of variations, and a court application becomes possible if assets remain. |
| Assets with large gains | CGT planning, valuations and concession checks. |
| Land or real property | Title transfers and a state duty assessment. |
| UPEs and loan accounts | Each balance needs paying out or properly documented, with tax advice. |
| A company trustee | Separate ASIC deregistration and the company’s own final tax position. |
| Family disagreement | Consents get harder to obtain, and disputes can end in court. |
What we see in Lawpath consultations
Some of the trust work that reaches Lawpath’s lawyers is repair work. Someone has already signed a deed of vesting, then started to worry it was defective, and now wants to know whether it can be fixed and what the tax exposure is. Checking a document before you sign it costs far less than fixing it afterwards.
Trust deed variations are a steady part of what our lawyers review. Variations are where a closure plan most often needs a second look. The power to vary has to exist in the deed, and the variation has to be signed before the vesting date passes.
Requests to set up new family trusts kept arriving through September 2026, months after the Budget announcement. If you’re closing one trust and starting another, get the same adviser to look at both decisions. Build the new structure for the post-2028 rules.
Common mistakes when closing a family trust
- Using a minute when the deed needs a deed. If the deed says early vesting requires a deed or written instrument, a meeting minute doesn’t satisfy it.
- Letting the vesting date slip past. The default beneficiaries named in the deed then take the capital, whether or not that’s what the family wanted, and you can’t vary your way out of it.
- Distributing before the tax is settled. If the trust can’t pay a tax bill that arrives later, the trustee pays it personally.
- Forgetting the family trust election. A final distribution to an in-law’s company or a friend outside the family group can attract tax at 47%.
- Treating dormant as closed. A trust with no activity but an active ABN still has lodgement obligations, and an old trust with a forgotten asset is still a live trust.
Can you get out of a family trust without closing it?
Yes, and often that’s the better move. If the trust still suits the rest of the family, you can step out of your role and leave the trust running.
Trustees can retire and hand over to a replacement using a Change of Trustee Deed, signed by the outgoing trustee, the new trustee and the appointor. Appointors can usually resign or nominate a successor under the deed. Beneficiaries can sometimes be removed from the trust if the deed allows variations to the beneficiary class.
Unit trusts work differently because unitholders own fixed shares of the trust. If that’s your structure, read our guide to dismantling a unit trust instead.
FAQs about closing a family trust
Can you deregister a trust?
No. Trusts aren’t registered with ASIC, so there’s nothing to deregister. You close the trust by following the deed, then cancel its ABN and GST registration and lodge a final tax return. If a company acted as trustee, you deregister that company separately.
How do I close a family trust in Australia?
Check the deed for the power to vest early, get final accounts and tax advice, and pay all debts. Then pass the required resolutions, distribute the assets, lodge the final return and cancel the ABN. Deregister any company trustee last.
Does closing a family trust trigger CGT?
It can. Transferring an asset to a beneficiary, or a beneficiary becoming absolutely entitled to it, is a CGT event. Cash-only trusts with no gains have little exposure. Trusts holding property or shares need a tax plan before vesting.
Can I close a family trust before the vesting date?
Usually, yes. Many modern deeds let the trustee bring the vesting date forward, sometimes with the appointor’s consent. If yours doesn’t, a variation may add the power, but it has to be signed before the existing vesting date passes.
What happens if the vesting date has already passed?
The beneficiaries’ interests are now fixed by the deed’s default terms, and the ATO says you can’t vary the deed to undo that. The trustee still has to distribute to those default beneficiaries and lodge returns. Get advice quickly, especially if distributions were made after the date.
What happens to the trustee company?
Nothing, until you act. The company keeps existing and keeps paying ASIC’s annual review fee. If it has no other role, all shareholders resolve to deregister it and apply to ASIC once the trust is finished.
Should I wait for the 2026 Budget changes before closing my trust?
If the trust holds assets with large gains, possibly. Proposed rollover relief from 1 July 2027 could let you move assets to a company or fixed trust without immediate CGT. Empty trusts gain nothing from waiting. The changes are still draft law.
Can beneficiaries force a family trust to close?
Only if every beneficiary is an adult with capacity, they’re together absolutely entitled to the property and they all agree. With a family trust’s open-ended class of beneficiaries, that’s rarely possible. Disputes about how the trust is run go to court instead.
Should I keep an old trust in case I need it later?
Rarely. An unused trust still costs returns and fees, and old deeds go stale as the law changes. If you need a trust again, a fresh Discretionary Trust Deed written for the current rules is the cleaner option.
Ready to close your family trust?
If your trust has been sitting in the “deal with it later” pile, you’re in good company. Most families only look at the deed when something forces them to. You don’t need to have the answers yet. Start with the deed and the vesting date, and the rest of the steps fall into place.
Want to know what your deed actually allows? Have someone read it with you. Book a consultation with a Lawpath business lawyer and get a clear closing plan for your trust.
