When should you create a family trust?
A family trust is a useful instrument for the purposes of estate planning and protection of one's assets. Here are some common scenarios in which you might consider this:
1. Asset Protection
- Protection of Assets from Claims: In any case, creation of a trust will protect your property, most especially after bankruptcy and in the case of a suit against you.
- Protection of Assets in Case of Divorce: A trust can come in as a handy tool for protection in case of a rough split.
2. Estate Planning
- Avoids Probate: Trusts save time and money by avoiding probate.
- Beneficiary Protection: You provide your beneficiaries as to how your assets will be spread by the trustee to pre-identified beneficiaries and thus offer protection to your beneficiaries.
- The trust can be used for providing for special needs beneficiaries: A trust can be used as an effective way to manage the finances of one of your beneficiaries if he or she is a person with a disability or possessing other requisites which call for his or her support.
3. Tax Planning
- Estate Taxes: This can assist in tax reductions on estates.
- Generating Income: There are those trusts that generate income; such can assist in planning purposes for tax.
4. Other Considerations
- A Trust in Applying Succession for Business: A trust can assist in transferring business to the next generation.
- Charitable Contribution: For an individual who wishes to make a charitable contribution, a trust will assist him or her.
An estate planning attorney may provide guidance on whether you can establish a family trust as he will kindly educate you on both the merits and demerits of the trust formation. Endorsed by the will then, he will be designed to meet your specific needs. At One Pacific Trust, our vision is to be the leading provider of trust services.
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