A family trust rarely exists in isolation. Around it sits a corporate trustee, one or more bucket companies, possibly an SMSF, and a web of inter-entity loans that grew year by year without anyone drawing a map.
Building that map is the starting point for better advice.
Quick Answer
To map a family trust, start with the trust deed and identify the trustee, appointor, and beneficiaries. Then expand outward: document the corporate trustee's directors and shareholders, any bucket companies, related SMSFs or investment entities, and all inter-entity loans including Division 7A arrangements and UPEs. Connect these in a visual diagram that shows both ownership and control.
Step 1: Start with the trust deed
The deed tells you everything you need to know about the legal structure. Extract:
- Trust name and registration (if applicable)
- Establishment date and settlor
- Vesting date
- Trustee (individual or corporate)
- Appointor
- Primary named beneficiaries
- General beneficiary class definition
- Any deed of variation dates and what they changed
If the deed has never been reviewed or updated, note that too. Outdated deeds are a risk, not just a gap.
Step 2: Map the corporate trustee
Most well-advised family trusts use a corporate trustee rather than individual trustees. The company itself needs to be documented:
- Company name and ACN
- Directors (note any that have changed since establishment)
- Shareholders (often the parents or a holding company)
- Whether any shares carry special rights (some structures use different share classes)
The corporate trustee is a separate legal entity and should appear as its own node in the structure map, with arrows showing that it holds the trustee role.
Step 3: Identify the bucket companies
Bucket companies are companies that receive trust distributions. They are typically owned by the trust's principal beneficiaries and are used to cap tax on distributions at the corporate rate.
Document:
- Company name and ACN
- Shareholders (who owns the bucket company and in what proportions)
- Whether the company is also a beneficiary of any other trust in the group
- Whether it has any outstanding loans to or from the trust
Bucket companies frequently appear in multiple places in a structure diagram: as a beneficiary of the trust on one side, and as a lender or borrower in the loan map on another.
Step 4: Map inter-entity loans and UPEs
This is the part of the map that is most often missing or inaccurate. Over years of operation, trusts make distributions to entities that do not always pay them out in cash. The result is unpaid present entitlements (UPEs) or formal Division 7A loans.
For each inter-entity financial relationship, document:
- The lender and borrower entities
- The loan balance as at the last balance date
- Whether it is a Division 7A complying loan agreement or a UPE
- The interest rate and repayment schedule if applicable
Drawing these loans as arrows on the structure map shows the financial relationships between entities and makes it possible to spot concentration risk, estate planning issues, and compliance gaps.
Step 5: Add the SMSF
If the family has an SMSF, it should appear on the same map. Even though an SMSF is legally separate from the trust structure, the family treats it as part of their wealth picture. Show:
- Fund name and fund ABN
- Members
- Trustee (individual or corporate)
- Any investments held in common with trust entities (e.g. a related unit trust the SMSF invests in)
Step 6: Review the completed map
Once all entities and relationships are on the map, review it for gaps:
- Are there entities the client mentions that do not appear?
- Is the appointor role clearly documented and currently occupied?
- Are any inter-entity loans undocumented?
- Does the structure as mapped actually reflect what you see in the financial statements?
This review step often reveals entities or relationships that were not previously captured in any single system.
Klaris is built to support this process. Using the KRSP Framework (Know, Record, Structure, Protect), accountants can build and maintain a living wealth structure map for each client group that updates with every review and is accessible to all authorised advisers. See how Klaris works for accountants.
Frequently Asked Questions
What entities should be included in a family trust map?
A complete family trust map should include the discretionary trust itself, the corporate trustee and its directors and shareholders, the appointor, all primary and class beneficiaries, any bucket companies, inter-entity loans and UPEs, and connected SMSFs or investment entities.
What is a bucket company in a family trust structure?
A bucket company is a company that is a beneficiary of a discretionary trust and receives distributions at the corporate tax rate (currently 25% for base rate entities in Australia). Bucket companies are a common feature of high net worth family trust structures.
Why do inter-entity loans matter in a family trust structure?
Inter-entity loans, including Division 7A loans and UPEs treated as loans, affect the tax position, the estate planning picture, and the value of each entity. Mapping them shows where money has moved between entities and what obligations exist.
How does Klaris help accountants map family trust structures?
Klaris provides a visual mapping platform where accountants can record all entities in a client group and define the relationships between them, including trusts, corporate trustees, bucket companies, SMSFs, and inter-entity loans.