When Trusts Own Companies: The Dispute Risk Nobody Documents Properly
Accountants are usually the first to see it — but the last to be warned.
Some of the most complex (and expensive) commercial disputes we see don’t start with fraud, misconduct, or a dramatic blow-up in the boardroom. They start with perfectly sensible structures that were never stress-tested for what happens when relationships change.
One structure appears repeatedly in private business:
A trust owns the shares in a private company, and key people wear multiple hats — trustee/controller, appointor, director, beneficiary.
On paper, it works. In practice, this structure is highly dispute-prone because control is often assumed rather than defined.
This article explains:
- where trust and shareholder disputes actually arise,
- what accountants typically see first, and
- when early legal input can prevent years of litigation.
Why this structure is fragile in disputes
A typical arrangement looks like this:
- a discretionary or family trust holds shares in a trading company,
- one or more beneficiaries are also directors of the company,
- the corporate trustee is controlled by a family member or related entity,
- the appointor role is misunderstood (or ignored), and
- informal arrangements exist about who “really” controls decisions.
From a tax and asset-protection perspective, the structure can be completely sensible.
From a governance and dispute perspective, it is fragile because the documents and the lived reality are often different.
Where the dispute risk actually comes from
Control is assumed, not defined
In many trust-owned companies, no one can confidently answer:
- who controls voting rights at shareholder level,
- who can appoint or remove directors,
- who can replace the trustee (and how), and
- who ultimately controls distributions and trust decision-making.
Everyone believes they’re “in control” until they aren’t.
When disputes arise, courts don’t decide issues based on assumptions. They look at the documents and the evidence:
- the trust deed and any variations,
- appointor provisions and succession mechanics,
- share registers and shareholder agreements (if any),
- company constitution, board minutes and resolutions, and
- what actually happened over time (conduct, communications, payment patterns).
Informal understandings rarely survive scrutiny.
Director duties collide with trustee obligations
A common flashpoint occurs where one person wears multiple hats:
- director of the company,
- beneficiary of the trust, and
- controller of the corporate trustee or influential decision-maker.
What is commercially sensible for the company is not always aligned with the trustee’s obligations to all beneficiaries.
This tension often emerges around:
- unpaid or reversed distributions,
- loan accounts that become “permanent”,
- private use of company assets (vehicles, equipment, property),
- remuneration versus distributions (and perceived fairness), and
- related-party payments without clear documentation.
Accountants often see these issues years before lawyers do because the accounts tell the story early.
“We’ve always done it this way” stops working
Many disputes involve long-standing arrangements that were never properly documented:
- a beneficiary living in trust-owned property rent-free,
- drawings treated as loans with no repayment terms,
- historical journal entries without supporting resolutions,
- company costs paid for personal or family purposes, and
- “temporary” agreements that quietly become permanent.
These arrangements can appear harmless when relationships are strong.
They unravel quickly when:
- a relationship breaks down,
- someone dies or loses capacity,
- a new spouse, partner or advisor enters the picture,
- cash flow tightens, or
- one person feels excluded from decisions or benefits.
At that point, historical accounting treatment becomes forensic evidence.
The appointor role is the quiet control lever
The appointor role is one of the most misunderstood and most powerful features of a trust.
In disputes, we often see:
- appointors who believe they have operational control (when they don’t),
- informal changes to appointor control without documentation, and
- appointor succession provisions ignored or misunderstood.
When a dispute escalates, control of the appointor role can determine:
- who controls the trust,
- who controls the corporate trustee, and
- who controls the company’s shareholder position (and therefore the board).
By the time this becomes contentious, the damage is usually already done.
The accountant’s position in these disputes
Accountants are rarely the cause of these disputes — but they are often pulled into them.
Common outcomes include:
- subpoenas for working papers and file notes,
- requests to explain historical entries and adjustments,
- allegations of “knowledge”, “approval” or “involvement”, and
- pressure to take sides between clients or family groups.
The risk is not just commercial. It is reputational.
Early legal framing can help to:
- preserve accountant neutrality,
- clarify roles and decision-making authority,
- reduce later criticism by putting the issues on a proper footing, and
- contain disputes before they become proceedings.
When early legal advice actually helps
Not every issue needs a lawyer immediately. But some issues are far cheaper to address early than to litigate later.
Early legal input is usually warranted where:
- control is disputed or unclear,
- distributions are being withheld, reversed, or informally “re-allocated”,
- beneficiaries are receiving unequal benefits without documentation,
- trust and company roles overlap heavily (and conflict), or
- a relationship breakdown is underway.
The goal is not litigation it is containment: protecting the structure, protecting the people, and preserving options.
The referral moment (without alarm bells)
From an accountant’s perspective, the referral question is not “is this a legal problem?”
It is:
If this relationship deteriorates, will today’s decisions look reasonable in court?
If the answer is uncertain, early advice can save:
- the client,
- the accountant, and
- the structure itself.
Final thought
Most trust and shareholder disputes are not caused by bad actors. They are caused by good structures that were never designed for conflict.
Accountants are often the first professionals to see the warning signs. Addressing them early preserves control and keeps the matter out of court wherever possible.
Want a practical checklist?
If you’re an accountant dealing with a trust-owned business and you’re seeing early warning signs, a short, targeted legal review can often clarify control, reduce risk, and preserve neutrality.
Boss Lawyers acts in shareholder, director and trust disputes across Queensland, with a focus on early containment and commercially sensible outcomes.
