Why a Family Trust Might Be a Good Thing
A Family Trust is a legally binding Estate Planning tool that’s set up to financially protect and benefit you and your family. Like other Trusts, a Family Trust might be able to help you avoid probate, delay, or reduce taxes and protect your assets. I’m always wanting to offer information for my clients on wealth management, family financial planning and success. There are many reasons to set up a family trust, including:
Property transferred to the trust is no longer owned by the settlor (or the beneficiaries) and therefore should not be subject to claims from future creditors, provided certain conditions are met at the time of settlement. With creditor protection in place, the settlor may decide to undertake a higher-risk occupation or venture with no risk over the trust assets.
Protecting Against Relationship Property Claims
If you gift assets to your children during your lifetime, these assets may become available to their partners under relationship property laws should their relationship end. By placing these assets in a trust instead of directly in the name of your children, your children can continue to receive the benefit of those assets without the assets forming part of their personal property and therefore not subject to claims from partners.
Protecting Family with Illness or Special Needs
A family trust may be used to provide for children or other family members who require medical care or have special needs, or who are unable to manage their affairs through either age or infirmity. Provisions can be made in the trust to protect against other family members who may intend to assume control of the family assets for themselves, following the death of the settlor.
Protecting Against Spendthrift Beneficiaries
Trusts can provide for long-term protection of family assets where you have concerns about how certain family members manage their financial affairs.
Flexibility to React to Change in Law
Modern trust deeds usually include provisions that allow variation of the trusts to deal with changes in the law.
As mentioned above, subject to applicable bankruptcy and family law provisions, assets settled in a trust no longer form part of the settlor’s estate upon his or her death.
When developing your wealth planning objectives, you must first decide whether a trust is suitable to meet your objectives. Careful consideration should then be given to how the trust is established and how it will be managed going forward. Ultimately, the main focus is to protect your family and loved ones for their future. It is advised to sit down with a trusted attorney to ask all of your questions before you start creating your family trust.
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