7 Reasons Why you should create a Trust

Put simply, a trust gives responsibility for managing and preserving trust property to a person or entity called the trustee. Meanwhile, the beneficiaries of the trust are the ones who actually get to receive trust assets, according to whatever terms the trust establishes for distributions.

Trusts have a reputation to be available only to the ultra-rich .Anybody can open a trust and it can be useful estate planning tool for lots of people. Given the expenses associated with opening a trust it is however advisable to open one when you have a certain amount of assets available to you.

A property managed by a Trust can provide you with several benefits and these include:

  1. Asset Protection.

    Trusts can be one of the most effective ways of protecting assets. In simple terms, assets transferred to a trust no longer form part of the property, so the trust assets cannot be seized if you get into financial difficulties.  Under certain circumstances however, the transfer into trust may be set aside and a court may order the trust assets to be transferred back to you.

  1. Tax Planning

Assets transferred into trust are no longer considered as belonging to yourself, so the income and capital gains generated by those assets are taxed according to the rules governing the legal owner – the Trustee. Inheritance tax would be eliminated because the Trustee would continue in existence despite death.

  1. Confidentiality

Proving a will is a public procedure. The tax authorities will need to receive a complete list of all the property owned by the deceased in order to assess the amount of estate duty payable before the property can be transferred to the executors who may then distribute to the legal heirs according to the will. This procedure is entirely unsuitable for those who wish to keep details of their assets confidential. The only other legal form of transfer is via a trust and this would generally save estate duty and keep the trust assets confidential.

  1. Estate Planning

Many people do not want their assets to pass outright to their heirs, whether chosen by them or as prescribed by law, and prefer to make more complex arrangements. These might involve providing a source of income, but not capital, for a spouse for life, making provision for the education of children but not letting them have access to capital until later in life, or providing a fund to protect members of the family in the event of sudden illness or other calamities. A trust is probably the most satisfactory and flexible way of making arrangements of this kind.

  1. Protecting the Weak

A trust provides a vehicle by which a person can provide for those who may be unable to manage their own affairs such as minor children, the aged, the disabled or persons suffering from illness.

  1. Preserving Family Assets.

Preserving the family assets, or increasing them, is often a motive for setting up a trust. An individual may wish to ensure that wealth accumulated over a lifetime is not divided up amongst the heirs, but is retained as one fund to accumulate further, with provision for payments to members of the family as the need arises while preserving some assets for later generations. This can be achieved through a trust.

  1. Continuing a family business.

If you are an entrepreneur who has built up a business you might be concerned in ensuring that it continues after death. If the shares in the company are transferred to Trustees prior to death, a trust can be used to prevent the unnecessary liquidation of a family company and to ensure that the individual’s wishes are observed.

As you can see, trusts are useful and have a number of benefits. In essence, though, they all boil down to a single benefit: guaranteeing that your assets will be used as efficiently as possible to meet your wishes and provide for yourself and those you love.

Trusts aren’t just for the rich. With many different purposes for trusts, you might well find that you could benefit from establishing a trust for yourself or your family