If you are looking to get your estate's affairs in order, your solicitor may recommend to you to set up a family trust. A family trust refers to a discretionary trust that your assets will be placed into. The main reasons why you may want to get this up is to ensure that your property and capital are protected in the event of your demise. Additionally, there also some tax benefits that can be repaid by putting your estate into a family trust. So what should you know when it comes to creating a family trust?
Who is a trustee?
As implied by the title, a trustee is a person that you give the power to control the trust and the permission to manage your assets. Furthermore, the trustee will be the person that decides what each person will receive from the estate. The people who are most commonly appointed as trustees tend to be the spouse of the deceases. Nonetheless, you are not limited to handing this power to your partner as you could also choose a business partner, a sibling or anybody else that you trust to follow through with your wishes.
Who is a settlor?
The settlor refers to the individual that is tasked with executing your trust deed. The settlor will be expected to provide assets in the trust to the trustee in accordance with the terms that were set by you when creating the trust deed.
What is a trust deed?
Without a trust deed, the family trust cannot be created in the first place. The trust deed is a document that is drafted by both a settlor and trustee. The document aims to stipulate terms and conditions that should be agreed on by any beneficiary that will be in the family trust. Thus, a trust deed gives you the chance to state what you expect to happen to your assets once you pass away and failure to adhere to these conditions will deny the beneficiary entitlement to the inheritance.
Who are the beneficiaries?
Your beneficiaries will be the people that you name in the family trust that you want to inherit your assets. However, since you have set up the family trust, your beneficiaries do not have an automatic claim to your assets. Instead, your chosen trustee will not only decide when they should be handed a benefit but whether this will be done via interest accumulating from the estate or if the assets will be divvied up among the beneficiaries.Share