Family trust vs company: structuring for high earners
It’s rarely either/or. A discretionary (family) trust and a company do different jobs — flexible income distribution versus a flat tax rate and retained earnings — and for many high earners the right answer is both, sequenced correctly.
By Justin Porrins, CFP® · SMSF Specialist Adviser™ · Last reviewed 25 June 2026
What a family trust does well
A discretionary trust offers flexibility in how income is distributed among beneficiaries, plus strong asset-protection characteristics. That flexibility is its superpower — and the reason it sits at the centre of many high-income structures.
What a company does well
A company provides a flat corporate tax rate, the ability to retain earnings for reinvestment, and a clean vehicle for running a business or holding certain assets. It trades some flexibility for stability and a predictable rate.
Why the combination — and the order — matters
Used together, a trust and a company can complement each other: the company as a beneficiary or operating entity, the trust providing distribution flexibility above it. But the value is entirely in how they’re set up and sequenced. The wrong order, or the wrong ownership, turns a good structure into a leaking one.
Where a unit trust and a bucket company fit
A discretionary (family) trust isn’t the only kind. A unit trust splits ownership into fixed units — useful when unrelated parties invest together and each needs a defined, transferable share, rather than the discretion a family trust gives. A bucket company is a company set up to receive trust distributions, “capping” the tax on retained profits at the corporate rate instead of a high personal marginal rate. Each is a tool with a job; the skill is knowing which the situation calls for.
The entity isn’t the point. The architecture connecting your entities is.
Common questions
Should I set up a family trust or a company?
It depends on what you need the structure to do — income flexibility, asset protection, running a business, retaining earnings — and how it fits the rest of your wealth. Many high earners benefit from both, but only when they’re designed and sequenced together. This is general information, not personal advice.
What is a bucket company and when is it used?
A bucket company is a company set up to receive distributions from a discretionary trust, so profits a family doesn’t need to draw personally are taxed at the company rate rather than a top marginal rate. It only helps when the surplus is genuinely being retained and the wider structure supports it — the order and ownership matter as much as the entity itself.
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