Advantages Of A Trust

Estate Planning

Trusts can provide an efficient way of planning for the management of assets upon death. Certain countries have legal codes prescribing how property will be distributed on death. Via a trust these forced heirship situations can often be avoided. A Trust may also enable a settlor to ensure that long term provision can be made to fund education of children or provide an income for a distant relative.

Tax Planning

Trusts continue to be used for sheltering certain assets from inheritance, capital gains and income tax liabilities both during an individual’s lifetime and on death. In simple terms once assets are transferred to the trust, they are no longer considered as belonging to the settlor and therefore with careful planning, a trust structure can provide substantial advantages.

Asset Protection

Trusts can be used as a means of protecting or ring fencing assets in order to protect a family’s financial security in situations such as possible business disaster or other unforeseen events giving rise to future claims.

Protecting the Vulnerable

A Trust can be a useful and flexible vehicle to provide for individuals not able to manage their own affairs, aged relations, minors, disabled or persons suffering from illness.

Family Wealth Preservation

Preserving and increasing the value of the family wealth is often a key motive for creating a trust, which provides an ideal method of centralising control and administration of assets. An individual may wish to ensure that the accumulated family wealth is not divided amongst a number of heirs but retained as one fund which can then accumulate further, protecting assets for subsequent generations.

This can be particularly useful when a family business is involved, with the shares of the company transferred to the Trust prior to the settlors death hence avoiding the potential liquidation of the family company.