The word family is derived from the Latin word “famulus,” which means household. It can also be interpreted as a group of people living in the same house who are related by blood or marriage. The only thing that makes it a family is the love and care they have for each other.
The family constitutes of both children and adults. It is a basic unit of community life and one of its most important aspects. Family is important because we need people in our lives who are there for us, unconditionally, through good times and bad.
When you think of a family trust, the first thing that probably comes to mind is an entity where you put your money for safekeeping. In reality, a trust can be a lot more than that. A trust is a legal agreement outlining how matters of estates and assets should be handled when the grantor dies and leaves their estate and affairs behind for his/her beneficiaries.
It is essential to understand the concept of a family trust. A family trust is an entity t established for the benefit of family members or beneficiaries and managed by an appointed trustee. The family trust can assist you in avoiding probate (a process by which your will is carried out after your death), delaying or reducing taxes, and offering protection to your assets.
In addition, the purpose of creating a family trust is to guard and manage family resources for current and future generations.
A family trust can be a sensitive subject, but it is an important subject to consider, since it can have bearing on the future of your family estate.
However, setting up a family trust is not that difficult because, nowadays, one can easily set up a trust online by going to the various sources available over the Internet.
So, if you believe you should play your part in leaving something behind for your family, then consider setting up a trust for them.
Reasons to Consider a Family Trust:
There are plenty of reasons to set up a family trust, including:
- Flexible Distribution
- Avoiding Probate Court
- Protection from the Creditors
- Family Health or Special Needs
- Division of Assets & Property
- Avoid Family Disputes
- Privacy
Flexible Distribution:
One factor that makes setting up a trust attractive is the flexibility of the distribution provisions. A trust details property distributions in the way seen fit by the grantor, who may or may not have died, which also differentiates it from a will.
A type of trust, known as a living trust, can be altered at any time when the grantor is still alive, if they so wish to do so. Additionally, changes to the trust can be made to accommodate for your children’s needs. For example, you could set up a legacy trust fund that provides financial support for your child’s future education or other requirements.
Avoiding Probate Court:
Among the many reasons to establish a family trust, one is that it helps you avoid probate court. Probate is the process where the estate affairs are handled by legal administers before the assets can be finally handed over to the inheritors.
It is time-consuming, expensive, and, more importantly, can be an emotionally charged affair. In a will, your assets are typically passed on to the inheritors specifically named. But before the assets of the estate or other financial affairs can be completely handed over to the inheritors, they’re administered by executors, who after deducting taxes and debt payments, bequeath the rest to the inheritors. Mainly, the purpose is to ensure that the wishes of the deceased are followed.
A family trust, on the other hand, can help you avoid the legal recourse to probate court as a trustee will be responsible for managing the estate affairs on behalf of the beneficiary or beneficiaries. Because of this, it is important to understand the fiduciary duties of a trustee as well as all their other duties so that an appropriate trustee can be chosen.
Protection from the Creditors:
The family trust protects your assets from creditors. Because the trust-maker or the beneficiaries no longer own the assets after establishing a trust, the creditors cannot claim the assets.
This can include protection from both the trust-maker’s and the beneficiaries’ creditors. Thus, meeting certain conditions upon making the agreement, the trust will be immune from future creditor claims.
Without the creditor security in place, the settlor may choose to engage in higher-risk employment or enterprise without fear of losing control of the trust’s assets.
Family Health or Special Needs:
Family health and some special medical needs are also huge issues for families with children. Typically, individuals with special needs require much more medical care than the average person, which can be expensive.
This is where a trust can be helpful. Trusts allow parents to provide for their children even if they are not around to do it themselves. Similarly, for children with special needs, trusts can help cover their medical costs.
Division of Assets & Property:
Dividing the assets and properties before death is better and more reliable than doing it after the fact. That’s why it is more advantageous to create a living trust than a will in case of property distribution.
In addition, a trust offers you more control over and accessibility to the assets or property if in case you want to change your mind. A residing conviction carries the details about the property’s inheritance, like who will be authorized to administer or mange it, even sell it, if the conditions called for it.
With the help of a trust, the grantor can ensure that each beneficiary receives their due share of the property.
Avoid Family Disputes:
A family trust can prove to be instrumental in helping you prevent disputes from festering between family members. Such disputes can drag in courts for years. A family trust helps curb these unseemly incidents from happening by putting the trust’s control in the hands of a trustee who then limits access to the beneficiaries. It also avoids, as mentioned before, the recourse to a probate court.
Privacy:
The data held by a family trust is not publicly available. The family trust offers greater privacy than a will can because once the details of the will go through a probate, they are filed under public records, easily accessible by anyone. A trust, on the other hand, doesn’t have to go through the probate to become effective, and therefore, the family details stay private.
Conclusion:
A family trust is an instrument that can be used for the benefit of your family. A grantor places assets in the trust for the benefit of the beneficiaries and appoints trustees to manage or administer its affairs. A trust is private, avoids the probate court, and allows you to provide for your family in life and in death.
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