Securing Your Assets
The family trust works when there is a transfer of legal ownership of assets to a trustee or trustees. This transference will still allow you to use those assets for as long as the trust deed permits.
Benefits of a Family Trust
A family trust protects your assets and can benefit you and your family members beyond your lifetime. Family trusts may be useful to:
Protect selected assets against claims and creditors or mitigate the risk of claims on estates.
Set aside money for special reasons, such as a children’s or grandchildren’s education.
Five Ways a Trust Can Be Better Than a Will
A trust can be used to avoid probate – a will cannot
A trust can provide creditor protection for the inheritance you leave to beneficiaries – a will cannot
A trust can protect governmental benefits for a person with disabilities – a will cannot
A trust can administer assets for minor beneficiaries and other heirs without court intervention – a will cannot
A trust can reduce estate taxes – a traditional will cannot.
Important Legal Terms
Trust deed: A legal document called a ‘trust deed’ will formally set up the family trust. It will name the trustees, list the beneficiaries and state various rules for the administration and management of the trust. The trust deed needs to be very carefully written, preferably by a lawyer.
A settlor: The person or company who creates the trust.
Trustees: The people who manage the trust. The settlor can also be a trustee. It’s also a good idea to appoint an independent trustee who is not a relative. Professionals like lawyers and accountants (or companies they have set up) often act as independent trustees.
Beneficiaries: The people who benefit from the trust, for example members of our family.