The basic idea of setting up a family trust is to protect assets and funds. There are a few things to consider to determine whether setting up a trust is the right choice for you.
There are many advantages to setting up a family trust. It may help to:
- Protect selected assets against claims and creditors – for example, to protect a family home from the potential failure of a business venture
- Set aside money for special reasons, such as a child’s education fund
- Ensure children, not their partners, keep their inheritances
- Manage the risk of unwanted claims on your estate after your death
- Ongoing legal and accounting fees – getting professional advice before setting up a trust is crucial to ensure it is to everyone’s benefit and ongoing management is required to comply with legal obligations
- If the trust has a complex structure the time involvement to manage it can be quite considerable
- Once you put your assets into a trust, you no longer personally own them. Ownership passes to the appointed trustees, who must act under the terms of the trust deed in the best interests of the beneficiaries
- Issues among family members can be expensive to resolve: There have been cases of family members suing the trustees if there is a breach of the trust’s provisions
The bottom line
If a trust it set up for the right reasons and managed well, it can have some great advantages. On the other hand, if this is done without expert advice a trust can cause considerable inconvenience and cost for all parties involved.
Are you thinking of setting up a family trust?
Please book in a time with us to discuss your options:
firstname.lastname@example.org or 09 470 1840
Ean Brown https://www.linkedin.com/in/ean-brown/