What are family trusts used for?

Family trusts are general-purpose legal instruments, and there could be several uses to which people use them. The major uses of family trusts include:

1. Asset Protection: Family trusts can protect assets from creditors, legal judgments, and other liabilities. When one transfers property to a trust, the assets transferred are owned by the trust in law, not by the individual, which could protect it from personal financial problems.
2. Estate Planning: Trusts can help avoid probate, which is the legal process by which the deceased's property gets transferred to the heirs. This quite often saves a lot of time, reduces substantially the legal expenses incurred during probate, and ensures that private financial affairs remain private.
3. Tax Planning: Trusts can be set up to minimize estate, gift, and other transfer taxes. These can save a great deal of money on taxes for beneficiaries.
4. Distribution Control: Trusts allow the grantor to dictate how, when, and whether a beneficiary can or will distribute the assets. This is especially so in cases of minor children, spendthrift beneficiaries, or those with special needs.
5. Special Needs: Trusts are drafted to ensure that family members with special needs are provided for without cutting them off from government benefits.
6. Estate Planning: Trusts can be utilized for estate-planning purposes. This often includes the preservation of family wealth, where it ensures that family money and assets are kept in the family and controls the method through which heirs receive or possibly inherit such family money and property, possibly even for generations.
7. Charitable Intentions: They can be set up to donate to charity either during the lifetime of the grantor or as a legacy enduring beyond this person's death.
8. Promotion of Family Values and Business: Trusts can promote certain kinds of behavior or success, such as funding education or business ventures, and they can also be used to hold and manage family business interests for their continuation.

These uses make a family trust a cornerstone of financial planning for one who seeks to ensure his financial legacy and look after the interests of his family. At One Pacific Trust, our vision is to be the leading provider of trust services.