Protect your Wealth with a Family Trust

Protect Your Wealth with Trusts

What is a trust? A trust is a legal agreement which allows you to safeguard your assets and protect your wealth by appointing Trustees to manage your assets on your behalf. Utilising a trust has several benefits, including reduction of estate taxes, planning your succession effectively, and passing on wealth efficiently to your Beneficiaries.

How Do Trusts Work?

Trusts are designed to be used easily by individuals who care about managing their future wealth. The Settlor, you, transfers the ownership of assets or cash to a trust. From here, the Trustees are the legal owners of the assets held inside the trust, and are responsible for managing the assets in the best interests of the beneficiaries. The Beneficiary is the individual, or group of individuals, who may ultimately benefit from the trust.

Why Use a Trust?

A trust can help ensure generational wealth for your Beneficiaries. Perhaps you are reaching an age where you start to think about giving some of your wealth to your children. However, you might not feel ready to give away your wealth in its entirety, and you may feel your children are not currently ready to receive and manage large sums of money. By using a trust, you can have the comfort that the Trustees will manage the assets properly, and only distribute wealth when they feel it is appropriate.

When a family member passes away, it is common for assets to be left outright to the next generation. This creates certainty as to where the wealth is distributed and is difficult to amend after death. However, a trust allows the Settlor to leave clear guidance to trustees on how the wealth should be distributed, but allows some flexibility to trustees to make changes if appropriate.

The advantages of this include:

Reduction of Estate Taxes

Once the assets have been settled into the Trust, the Settlor is no longer the legal owner of those assets and the Trustees administer the Trust in line with the relevant law applicable to the Trust. When the value of the assets has been removed from your estate, your beneficiaries can  enjoy a reduction in estate tax.

Passing On Wealth Efficiently

If assets are not held in a trust, upon death, the legal process to administer the estate and apply for probate can be complex, and time-consuming. By using a trust, the Trustees can distribute wealth to the beneficiaries more quickly, given that many aspects of the legal process can be avoided.

Succession Planning

The Trust structure allows the Trustees to manage the wealth in a way appropriate to current family circumstances. It is feasible the potential beneficiaries are perhaps too immature to handle significant wealth or perhaps undergoing a divorce. The Trustees have an obligation to ensure trust assets are distributed in the best interest of all Beneficiaries, which can even include paying annual income or advancing interest free loans rather than gifting capital.

Book a consultation with us and find out more about Trust Planning here.