What are the benefits of Family Trusts?

Some of the major benefits associated with Family Trusts make them an important instrument during estate planning. Some of the major advantages of Family Trusts are as follows:

1. Protection of Assets: The most major advantage of a Family Trust is the protection it offers against creditors, lawsuits, and divorce settlements. Once the assets are transferred to a Family Trust, they no longer are considered to be part of one's estate, protecting them from the creditor's seizure action against it.
2. Asset Distribution: With the help of a Family Trust, the settlor shows how assets are to be distributed to the beneficiaries and with the assurance that the trust conditions will be followed. This is very significant for families with minor children or dependants with special needs, or whose beneficiaries are not financially responsible. The settlor may indicate certain conditions to be satisfied before any distribution is made, which could include an indication of age or particular milestones.
3. Minimum estate taxes: The assets could be taken out of the taxable estate of the settlor by the Family Trust, thus minimizing estate taxes. In relation to that, estate taxes may not be payable upon the death of the settlor on the assets held in the Family Trust, depending on the jurisdiction and how the trust was set up.
4. Wealth Preservation: The Family Trust allows the growth of the assets in the trust that are then transferred down the generations without requiring probate. This way, it ascertains that the family retains the wealth while avoiding unnecessary delay and costs involved in probate.
5. Avoidance of Probate: One of the biggest advantages of Family Trusts is avoiding probate when the settlor dies. Because of this, much time and money can be saved; the process for probate may be very lengthy and expensive. Distribution of the trust assets is performed pursuant to the terms of the trust without any court interference.
6. Tax Efficiency: It is well-settled that through an appropriate structuring of the trust to provide income distribution to beneficiaries in lower tax brackets, there can come about certain tax advantages. The distribution of income to beneficiaries will have the overall effect of minimising the overall tax liability.

Accordingly, Family Trusts offer a great deal of advantages such as asset protection, control over the distribution of wealth, estate tax savings, and the avoidance of probate. A Family Trust can be pretty instrumental in ensuring that family assets are well kept to be given out according to the wish of the settlor.