Introduction
Trusts are legal agreements, which enable trust holders (known as grantors) to appoint trustees to hold assets for a beneficiary. There are many different types of trusts. In this guide, we’ll explore family trusts in detail, explaining what they are, and what kinds of benefits they offer. Having a trust can help to provide additional protection for partners and family members. There are also tax benefits linked to some types of trusts.
What is a Family Trust?
A family trust is a type of living trust. It involves three key parties: the person opening the trust (the grantor), the trustee and the beneficiaries. If you set up a family trust, you can name family members as beneficiaries. This may include your children and grandchildren, your spouse, your siblings, or other relatives, such as aunties, uncles and cousins. When you set up a family trust, you can decide whether it is revocable or irrevocable. Revocable trusts can be changed while irrevocable trusts can only be altered if all the beneficiaries consent.
What are the benefits of a Family Trust?
The main benefit of a family trust is that it enables you to take control of managing your assets. If you have $1 million worth of assets, for example, and you want to split it between your children and grandchildren, you can name your beneficiaries in your family trust. The trust allows you to determine when the beneficiaries receive the assets and how they are divided. You can also use a family trust to provide care for family members who need lifelong or long-term care via a special needs trust.
Another advantage of a family trust is to avoid probate. This speeds up the process of accessing assets and it can also save money and stress for the beneficiaries. If you opt for an irrevocable family trust, your assets will also be protected from creditors. You can also take advantage of tax savings.
How to set up a Family Trust
If you’re considering setting up a family trust, it is beneficial to seek expert legal advice. A lawyer can help you draw up the trust agreement and offer advice to help you make the most of estate tax reductions and protect your assets from creditors. Hiring a lawyer simplifies and speeds up the process of establishing a trust and it can also help to ensure that your wishes are respected. Having a family trust is part of effective life planning. Studies show that only 40% of Americans have a living trust or a will.
Conclusion
A family trust is a legal arrangement, which enables a grantor to pass responsibility to a trustee to hold assets for beneficiaries. If you’re thinking about setting up a family trust to protect your assets and reduce estate tax liabilities, seek expert legal advice. Family.Estate can match you with a qualified lawyer in your local area to help you take care of all your family trust matters.
Sources:
https://www.forbes.com/advisor/investing/financial-advisor/family-trust/
https://smartasset.com/financial-advisor/family-trust
Disclaimer: This is not legal advice and information may vary between states. Information found on this website is general in nature. Please consult with a lawyer for personal support.
