Setting up and running a trust can be expensive because a formal trust deed is required. The trust deed sets out the rules for how the trust will operate.

The trustee must act in accordance with the trust deed, including distributing income to trust beneficiaries as specified in the trust deed. A trustee cannot distribute trust losses to beneficiaries. However, it can carry trust losses forward to offset future year’s net income.

In addition to the requirements of the trust deed, the trustee must also deal with the trust property in accordance with the relevant state or territory trust law.