A Trust is a legally binding arrangement whereby a person (the Settlor) transfers legal ownership of assets to certain chosen persons (Trustees) to be held on Trust for the benefit of persons named by the Settlor (the Beneficiaries).
The legal transfer of ownership is subject to an agreed set of rules known as the Trust Deed. The Trust Deed also sets out directions from the Settlor to the Trustees on the way in which the assets of the Trust are to be distributed to the Beneficiaries. It also records the powers that the Trustees have in dealing with the Beneficiaries.
Who is a Trust for?
A Trust is for anyone looking to protect assets and ensure that those nearest and dearest to them are looked after and are able to benefit from those assets in the manner that they intended.
An entrepreneur is a good example of just such a person. An entrepreneur launches a business and it is wildly successful. His family enjoy a certain standard of living thanks to this success. His daughters now go to the best private schools. Our entrepreneur places his new found wealth into a Trust set up to ensure that his family will always enjoy this new standard of living and to provide for his daughters educations. He then launches another business… will this one fail? Only time will tell. What we do know is that the assets placed in Trust cannot form part of a claim against the new business should anything go wrong. The Trust insulates the entrepreneurs family from the ups and downs of business.
Why set up a Trust?
Privacy – assets are held in the Trustees’ name, with the identity of the Beneficiaries kept confidential
Preservation of wealth – a Trust may be used to preserve assets and keep them within the family
Asset protection – a Trust may protect assets from legal claims such as Forced Heirship and Probate
Succession planning – a Trust is an effective tool for succession planning allowing you to ensure that assets are passed on in the way that you wish without fear of legal challenge
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