Are you looking at operating your business through a trust? Have you decided who will be the trustee of the trust? A trust cannot operate business and it cannot enter into contracts. Every trust requires either an individual or a company to be appointed as a trustee to operate the business and enter into contracts on behalf of the trust. Put another way, every trust requires an Individual or Corporate Trustee.

Individual trustee

An individual trustee is appointed in the process of setting up the trust and there is no need to set up a company or incur any further costs. The process for appointing an individual trustee is quite simple and economical. There are, however, a few disadvantages of having an individual trustee.

Firstly, being an individual trustee comes with responsibilities. The trustee acts on behalf of the trust and manages it, and if something goes wrong, the individual trustee may be personally liable.

Secondly, as the trustee is the legal owner of the trust assets, it can be difficult to distinguish the trust assets from personal assets which can cause significant issues if the trustee runs into any financial problems.

And thirdly, what happens when the trustee dies? If an individual trustee dies, the trust assets it is holding will have to be transferred to another legal entity and there could be difficulties in regards to the administration of the trust.

Corporate trustee

In comparison, having a corporate trustee is more expensive to set up in the beginning, as it requires the incorporation of a company. This also means ongoing costs to keep records and accounts for the company. However, all the disadvantages of the individual trustee situation are mitigated by having a corporate trustee.

Firstly, because a company is separate legal identity, it has the benefit of limited liability. This means that, except for exceptional circumstances, for example, fraudulent activity, the directors and shareholders are not personally liable.

Secondly, as the trust assets will be owned by the company, it will be easier to distinguish the trust assets from personal assets of the directors and shareholders.

Thirdly, a corporate trustee does not cease upon the death of an individual director or shareholder, allowing ease of succession.


Despite slightly higher start-up costs, it is generally more advantageous for the business to have a corporate trustee rather than an individual trustee. If you require any assistance in setting up a trust and/or corporate trustee, contact LegalVision today!

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