It is possible to hold all manner of different assets in a trust. This includes but is not limited to:
- Family Heirlooms
- Real Estate
A huge benefit of a trust is that, unlike a will, you are able to see your assets distributed before you have passed away. The flexibility that comes with this form of estate planning means that you are able to see your money contribute to your chosen organisation, pay for the education of your family, and more. Additionally, a trust ensures that you bypass probate, saving your beneficiaries large amounts of money. This ensures that your money is able to go a lot further.
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Do Your Research
The first step of the trust process should always be to do ample research to ensure that you are making the best decision for you and the long-term security of your assets. Deciding between a will and trust can be difficult. Both have their pros and cons.
For example, a trust is excellent for avoiding probate and reducing estate, whereas a will lessens the inheritance tax etc.
The best way to work out which option is best is to research both — look at your assets, review the fees associated with both and decide what you see as the best choice. If you are struggling to decide, you may wish to contact an independent specialist who would be able to make a recommendation using all evidence available.
Select Your Trustee(s)
Three parties are required in order to properly establish a trust: the grantor, the beneficiary, and the trustee. The trustee is the most important person in the process as they are there to ensure your assets and funds are distributed properly if you are unable to.
A trustee will also offer support to the beneficiary should they require it. They will be there throughout the entire process, explaining your wishes and making sure the beneficiary understands the terms laid out.
It is important when establishing a trust that you have a clear and exhaustive list of your current assets. Having a good idea of all the assets you wish to place into the fund, as well as their values will save a great deal of time down the road. It also allows you to be more specific with where you wish certain items to go.
Deciding on a beneficiary/beneficiaries usually comes down to close young family members such as your children, nieces/nephews etc., or even an organisation you are passionate about supporting, such as a charitable foundation.
Once you have decided on your list of beneficiaries, you can then consider which assets will go to certain beneficiaries and the amount they will receive.
With most of the important decisions finalised, the last important thing to consider is discussing the final term with your solicitor. Things to consider at this stage include:
- How funds should be divided
- At what point assets should be distributed
- How should the trust be managed
- Can the trust be cancelled for any reason
An asset protection trust is a specialist trust that shields the grantor’s assets against any creditors. An asset protection is one of the best protections against creditors you can have.
Asset protection trusts are watertight — meaning that should the beneficiary wish to sell, spend, or give away any of the assets contained in the trust they must meet the specific stipulations of the agreement.
Family trusts are types of trusts which specifically list family members as the beneficiaries. A family trust is a living trust, meaning that it can take effect before the grantor has passed away.
The flexibility in the setup of a family trust means that the grantor can stipulate if it can be altered at any time. You are also able to name yourself as trustee should you wish with successors in case you become incapictated.
This unique type of trust is one with specific instructions and stipulations that state that a surviving spouse is able to continue living in your property, but your share of the property remains separate.
Generally this is so that a child or other loved one is able to inherit once the surviving spouse dies.
The core purpose of an asset protection trust, unlike other types of trusts, is not to pass money on, it is to protect it from creditors.
An asset protection trust is irrevocable. This means that once assets have been listed and transferred into the care of the trust, they cannot be accessed unless conditions are met.
A family trust is likely the most well-known type of trust. It is a way for a trustee to leave their possessions; including money, heirlooms, assets such as cars, homes, or even pets, to loved ones, friends, or charitable organisations,
A family trust can be altered at any time, and can even be accessed prior to the death of the trustee should they wish.
Property protection trusts can be difficult to set up due to moving parts and potential complications. This type of trust specialises in situations where the trustee passes their share of a property over to a party, usually children. However, the property only actually passes to the beneficiaries when the surviving spouse living in the property dies.
There are a few important things to always be aware of and reviewing when it comes to your trust. This includes:
- Have there been any deaths that invalidate the trust
- Is your trustee still the right choice
- Has there been any new births in the family that should be added to the trust
- Have there been any deaths that need to be reflected
- Are there any other beneficiaries to be added
It may be possible to access a fund early. However, to do so the beneficiary will generally need the full cooperation of the trustee(s).
Traditionally, the trustees are basing their decisions on the direct intentions of the grantor, meaning that if the beneficiary can’t convince them that the early release of assets is justifiable then they have no legal right to do so.
Should the issue be serious enough, it may be possible for beneficiaries to take the trustees to court over their failure to release the funds early. However, it is worth remembering that the courts more often than not will recognise the authority of the trustees.
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How Do Trust Funds Pay Out?
A trust fund can be paid out depending entirely on the wishes set out by the grantor. The fund can be paid out either in one lump sum on a date specified, or in smaller increments to be spread out over several years, or on different milestones.
How Much is Needed to Start a Trust?
While the practice may be most commonly associated with the wealthy; trusts can be applicable to anybody. All you need is the funds required to pay for setting up the trust itself.
Do Trusts Pay Taxes?
Trusts do not pay taxes. One of the key benefits of utilising a trust is that it can offer important tax benefits for your beneficiaries compared to a will. Generally, a beneficiary of a trust will pay taxes on the distributions they receive instead of the fund itself paying tax.
Are Trusts a Good Idea?
A trust can be an excellent way to leave assets and funds to loved ones while stipulating exactly what happens to them and when. It is also good to limit tax on the inheritance. However, trusts are complicated. It is always a wise idea to contact a solicitor to discuss the finer details of a trust.
Can You Put Your House in a Trust?
You are able to place property into a trust for your beneficiary to inherit at a later date. There are also specific types of trust dedicated to homes. Asset and property protection trusts are two examples of trusts that are designed with assets like homes in mind.
Contact a specialist for more information placing your house in a trust and the intricacies of such a situation.
How Much Does a Trust Cost?
The cost of setting up a Trust will depend on the type of Trust, as well as its complexity. Once we have assessed your individual requirements, we can give you an accurate estimate of the cost involved.
How Long Do Trusts Last?
Trusts generally will only last a few years — until a beneficiary reaches the specified age of inheritance. However, the stated time a fund can last for is generally up to 125 years for a personal trust. There is no limit to a charitable trust.