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Benefits of a Family Trust - Infographic


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Trusts are perfectly legal but they aren’t magic. In a nut shell, trusts can protect assets as they are a separate legal entity to yourself and you can stream income to take advantage of marginal tax rates.

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Benefits of a Family Trust - Infographic

  1. 1. Th E B e n e f its of a f a m i ly tr u s t 1. Protect selected assets against claims and creditors – for example, to protect your family home from the potential failure of a business venture. 2. Set aside money for special reasons, such as a child or grandchild’s education. 3. Ensure your children, not their partners, keep their inheritances. 4. Avoid unwanted claims on your estate when you die – such as from a former partner. who’s Involved A S et tlor T rus t e e s B e n e fic ia r ie s it’s me Love your lawyer! let’s leave it to the boys! Th e people w h o ben efit The person or company from t h e t rust , for example who creates the trust, e.g. YOU. members of your family. Th e p eop le w ho manage the trust. If you a re t he se t t l o r yo u c a n a ls o b e a truste e . It’s also a good id e a t o a ppo i nt a n ind ep ende nt truste e like a lawyer o r a cco unt a nt . What’s Involved 1 . You will need to decide what assets should be put into the trust. 2 . Ownership of these assets will then be transferred to the trust. 3 . The trust then owes a debt back to you, the settlor. This debt can then be ‘forgiven’ through a process called gifting. 4 . A legal document called a ‘trust deed’ will formally set up the trust. 5 . It will appoint the trustees, list the beneficiaries, and state various rules for the administration and management of the trust. 6 . The trust deed needs to be very carefully written, preferably by a lawyer. Costs and risk s C os t s of t rus t s Family trusts can be complex and time consuming to administer. It costs money to set them up and there are generally ongoing legal and accounting fees. Risks of trusts If a trust is not set up or managed well, there can be considerable inconvenience and cost. Onc e y o u p u t y o u r a sse t s into a t r ust , y ou no lon ger pers o n ally o wn o r co ntr o l t he m . In st e a d, owne r sh ip pa sse s to t he appo i n ted trus tees who mu s t ac t u n de r t he t e r m s of t h e t r ust d e e d i n the bes t i n teres ts o f t h e b e ne ficia r ie s. Getting advice Family trusts should typically be formed by a lawyer or a professional trustee company. TM Twitter@PassareInc Facebook Tumblr SOURCES