Who should I put as the Settlor?
Best practice is to have a close, though unrelated, family friend as the Settlor.
We do not accept relatives of the beneficiaries or trustees as Settlors. The Settlor has to be someone that will never benefit from the trust, and the trust deed specifically excludes the Settlor from benefiting. This is primarily due to the adverse tax consequences that can otherwise arise - refer S.102 of the ITAA 1936, in particular. Also, it avoids the possibility that the Trustee may, at some stage later on, accidentally breach the trust deed by making a distribution to the Settlor.
There have also been instances where the validity of the entire trust has been questioned because it was found that the settlor (e.g., an accountant) charged for providing the settled sum, meaning it was never properly gifted to the trust, and therefore there was no trust property to allow the trust to exist.