With a family trust, you have the assurance that your assets will go to your loved ones in case of your untimely demise. This also allows you to structure finances for tax purposes, stop unnecessary claims on your assets, and keep financial matters confidential.
After a family trust lawyer has set up a trust for you, legal ownership of your assets is transferred to the trust, but the right to enjoy and use them remains with you. For example, if you include your home in the trust, you no longer own it, but you can still legally live in it if it’s so provided in the trust deed.
Why Set Up a Family Trust
There are many reasons that prompt people to set up a family trust. These include:
- Protecting specific assets against creditors and claims, like your home from losses of a sole proprietorship
- Avoid unnecessary claims on your estate, like claims from business partners, in case of your death
- Set some money aside for specific purposes
- Make sure that your children, not their spouses or partners, get to keep their inheritance
Parties Involved in a Trust
The following are the parties involved in a family trust:
- Settlor – The company or individual who creates the family trust.
- Trustee – The individual or group of people tasked to manage the trust. The settlor may also be the trustee, but it’s advisable that an independent trustee, such as an accountant or a family trust lawyer, be appointed.
- Beneficiary – An individual or group of people who will benefit from the trust, such as yourself or your family.
In many cases, trusts have multiple trustees, settlors, and beneficiaries. The settlor can appoint and remove a trustee and transfer the designation to anyone in the will. Likewise, a trust does not end automatically with your demise, as it can be effective for up to 80 years after inception.
Creating a trust is a major decision. Thus, you must establish it properly — for the correct reasons — and it managed well. This will keep family members from suing one another over disputes about the provisions in the trust.