The aim of a family trust is to protect the ownership of our assets, for the benefit of ourselves and our family members. For example, many business owners establish a family trust to protect their home in the event of business problems.
How does a family trust work?
A trust is a legally binding arrangement when a person (the settlor), transfers legal ownership of assets, such as property, cash or shares, to certain persons (the trustees), to be held for the benefit of persons named by the settlor (the beneficiaries).
In the example set out above, the business owner would no longer personally own the house, but they can continue to live in it if that’s what the trust deed states.
Do I need a trust?
Reasons for forming a family trust include:
- Asset protection – a trust may protect assets from legal claims to the extent permitted by law. Claims can come from business, creditors, spouses or partners. For example, a trust can offer protection during a relationship or marriage breakdown.
- Preservation of wealth – a trust may be used to preserve the continuation of assets within your family, by protecting your children from unwise investments and spending before they have gained enough life experience to be able to make sound financial and business decisions.
- Succession planning – a trust is often used with succession planning for your family members, friends and charities.
I already have a will – is it necessary to form a trust too?
Every adult should have a will, but a will comes into effect only after you die, whereas a trust will protect your assets during your lifetime.
How can I set up a family trust?
Forming a family trust requires sound advice and legal expertise. Armstrong Murray will make things easy for you and can provide independent trustee services for the life of your trust. We will make sure that accurate records are kept, trust documents are safe and all legal requirements, old and new, will be met.
Setting up a trust doesn’t need to be complicated or costly, and the ongoing management of a trust can be fairly straightforward.
If you’d like to chat about making a family trust, please contact reception.
This article is brief and general in nature. You should not treat this article as legal advice and should seek professional advice before taking any action in relation to the matters dealt with in this article. Armstrong Murray accepts no liability for losses suffered by any person or organisation who may rely directly or indirectly on this article.