A unit trust allows multiple investors to pool capital under a single, governed investment vehicle. Each investor holds units, proportional interests in the trust's assets, rather than owning those assets directly.
Why it's used
Separates investment risk from personal liability. Assets are held in trust, not owned by any individual investor. Widely used by family offices and emerging fund managers in Australia.
Legal basis
Governed by the Trust Deed and the Corporations Act 2001 (Cth). The trustee holds legal title to assets; unit holders hold the beneficial interest.
Tax treatment
Pass-through taxation, the trust itself does not pay income tax. Income and capital gains flow through to unit holders in proportion to their units, taxed at each investor's own rate.
Goodrich Partners
Goodrich structures and oversees private unit trusts, working alongside AFSL-licensed partners to establish and register the vehicle. Where mandates require, Goodrich operates as a Corporate Authorised Representative, holding the fiduciary position directly. Click any layer in the diagram, or step through each section below.
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The Unit Holders
Unit holders are the investors in the trust. They contribute capital in exchange for units, proportional interests that entitle them to a share of income, capital gains, and the eventual return on their investment.
What units represent
A proportional beneficial interest in the trust's net assets. If the trust holds $10M and you hold 10% of units, your economic interest is $1M.
Limited liability
Unit holders are not personally liable for the trust's obligations. Their exposure is limited to their contributed capital, a key protection the structure provides.
Who can invest
In Australia, unit trust offers are typically made to wholesale (sophisticated) investors under s708 of the Corporations Act 2001 (Cth). This exemption means no product disclosure statement is required.
Subscription process
Investors complete a Subscription Agreement and pass KYC/AML verification. Units are issued by the trustee at the prevailing unit price, calculated by dividing net asset value by units on issue.
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The Trust Deed
The Trust Deed is the governing document of the trust. It defines everything: who can invest, how decisions are made, what the trustee can and cannot do, how income is distributed, and how the trust is wound up.
Investment mandate
Defines permitted asset classes, concentration limits, geographic restrictions, and prohibited investments. This is the boundary the trustee operates within, every investment decision must sit inside it.
Distribution provisions
Specifies when and how income and capital gains are distributed to unit holders, annually, quarterly, or on a discretionary basis determined by the trustee.
Trustee powers
Defines the specific powers and limitations of the trustee. I.e. to borrow, delegate, appoint agents, call capital. Anything not expressly permitted requires unit holder approval.
Voting thresholds
Defines which decisions require unit holder consent, changing the trustee, amending the deed, winding up the trust, and the majority required for each.
Goodrich Partners
Goodrich works with specialist fund formation counsel to draft Trust Deeds that are fit for purpose, not generic templates. The investment mandate and governance framework are designed before the deed is drafted.
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The Trustee
The trustee is the most important role in the structure. It holds legal title to all trust assets, acts on behalf of unit holders, and bears the fiduciary duty to act in their best interests at all times.
Fiduciary duty
The trustee must act in the best interests of unit holders. This duty is personal to the trustee's directors and enforceable under both trust law and the Corporations Act.
Legal title vs beneficial interest
The trustee owns the assets on paper. Unit holders own them economically. This separation is the core protection the unit trust structure provides. Assets are shielded from the personal creditors of any individual.
Licensing requirement
In Australia, acting as responsible entity for a managed investment scheme requires an AFSL or an Authorised Representative authorisation. This is not optional, and not replicable by a generalist advisor.
Compliance obligations
The trustee is responsible for ASIC reporting, AML/KYC compliance, annual audit oversight, and ongoing regulatory obligations. Breaches are the trustee's liability, not the unit holders'.
Goodrich Partners
Goodrich structures and oversees private unit trusts, working alongside AFSL-licensed partners to establish and register the vehicle. Where mandates require, Goodrich operates as a Corporate Authorised Representative, holding the fiduciary position directly.
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The Investment Committee
The Investment Committee approves individual investments, operates within the mandate set by the Trust Deed, and is accountable to the trustee and ultimately to unit holders.
Decision process
Investment proposals are presented to the IC with a defined information set: investment memo, financial model, due diligence summary, and risk assessment. Approval requires a quorum and a defined majority vote.
Composition
Typically three to five members with relevant investment expertise. The IC charter defines required qualifications, quorum, voting rights, and term lengths, and may require at least one independent member.
Conflict management
IC members with a conflict of interest in a proposed investment must declare and recuse. The process is documented and available to unit holders on request, transparency is non-negotiable.
Minutes and records
Every IC meeting produces signed minutes. These form the legal record of the trust's investment decision-making and are retained for the life of the fund.
Goodrich Partners
Goodrich provides investment committee governance as part of its trustee and fund management mandates, including chairing the IC, managing the agenda, and producing compliant records. For new funds, we design the IC charter before the first investment is made.
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The Portfolio
The portfolio is the collection of assets held by the trust. Assets are legally owned by the trustee but held for the benefit of unit holders in accordance with the Trust Deed's investment mandate.
Private company equity
The most common asset class for venture and private equity unit trusts. The trust holds shares or convertible notes in portfolio companies, managed through the investment committee process.
Listed equities
Publicly traded shares, ETFs, and other listed instruments. More liquid than private equity, commonly used in diversified family office and wealth management trust structures.
Real property
Residential or commercial property held through the trust structure, used in family wealth vehicles for asset protection, estate planning, and consolidation of property interests.
Fund-of-funds
A unit trust can hold units in other trusts or funds, enabling a layered structure where the top-level vehicle aggregates exposure across multiple underlying vehicles and managers.
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Returns & Distributions
Distributions are how unit holders receive returns. They flow upward through the structure. From portfolio assets, through the trustee's accounts, and out to unit holders in proportion to their units held.
Pass-through taxation
The trust itself pays no income tax. All taxable income, dividends, interest, capital gains, passes through to unit holders who include it in their own tax returns at their individual rate.
Capital gains treatment
On sale of a portfolio asset, the capital gain is distributed to unit holders. Individuals who have held their units for 12+ months may access the CGT 50% discount.
Distribution reinvestment
The Trust Deed may allow distributions to be reinvested into additional units rather than paid out in cash, compounding the unit holder's economic interest over the life of the trust.
Annual tax statement
The trustee must produce an annual tax statement for each unit holder detailing their share of the trust's income, capital gains, and any franking credits.
Ready to structure your investment vehicle?
Goodrich designs, structures, and operates unit trusts for private investors and fund sponsors. If you're considering a vehicle for your next investment, or want to understand whether a unit trust is the right structure, contact us for a conversation.
Goodrich Partners structures and governs private unit trusts and venture capital funds across Australia and Asia Pacific. Working with licensed partners to establish, register, and operate the vehicle from first close through to wind-down."