It’s a prevalent misconception that you can form a trust only if you own a large estate. However, regardless of the value of your wealth, you can set up a family trust to protect your assets. A family trust is composed of the following components:
- Settlor –Settlors have full control over the trust. They can approve the distribution of assets and appoint or remove trustees
- Trustee –Trustees administer the trust and make sure that beneficiaries get their legal rights
- Beneficiaries –Beneficiaries receive benefits from the assets
As people age, they tend to think how their assets will be distributed among their family members after their death. If you’ve reached your 60s, you should write a will and form a trust. That way, you can protect your family from legal issues and make sure they receive their inheritance as per your wishes. Here’s why you should think of creating a family trust to manage your properties and other assets:
Reduce Taxes
When your family gets their inheritance, they have to pay huge taxes on the assets. However, you can reduce the tax net by creating a trust. You can save thousands of dollars in taxes by distributing your wealth via a legal trust.
Fulfill The Special Needs Of Your Family
If any of your family members are suffering from a mental health illness or a chronic disease, you can protect their rights with the help of a family trust. Moreover, the family can also manage your assets after your death if your children are too young.
Protect Your Assets
If you own a house, it’ll be a hectic procedure to transfer the house to your children after your death. You can form a trust to make that task easier.
You can specify in the trust deed that the ownership of the house remains with the trust in your life and transferred to your children after your death. This way, you can protect your assets and avoid legal issues.
Long-Term Planning
A family trust is an effective way of managing your wealth on a long-term basis. After your retirement, it may not be easy for you to manage your finances. However, if there’s a family trust in place, you can receive a fixed amount every month to cover your expenses.
The trust will also manage your investments and protect you from financial problems.
Prevent Claims Against Your Will
In some states of the US, Courts have the right to revise your will after your death if the inheritors claim that they are disadvantaged by the provisions. The Family Protection Act 1955 gives them this right.
However, if you want to make sure that your assets are distributed as per your wishes, you should consider forming a trust.The Court can’t rewrite the trust deed even if the beneficiaries are dissatisfied with its provisions.
To be precise, a family trust is a great way to protect your assets. You can prepare a trust deed to explain how your property and possessions should be distributed among the inheritors.
