The Importance Of Family And Family Protection Trusts

By Author: Mathew Gibbon
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Family protection trusts can be found when one person (the "trustee") will hold and own some property solely for the benefit of another (a "beneficiary"). A family trust can be described as a trust set up to financially benefit your family members.

What are family protection trusts?

Family protection trusts can be found when one person (the "trustee") will hold and own some property solely for the benefit of another (a "beneficiary"). A family trust can be described as a trust set up to financially benefit your family members.

The purpose of the family trust is to allow you to progressively switch your assets into the trust, this means that legally assets are not owned by yourself, although it will be possible for you, through the family protection trust, to still have an element of control, as well as the benefit of, these assets.

You can set up a family trust whilst your living (by a declaration of trust contained in a trust deed) or when you die (stated in the terms of the Will). The information within this article mainly talks about family trusts created while you are alive, and with the benefits ...
... that these family trusts offer for you in your life time.

What are the core factors of a family trust?

Well, similar to other types of trust, a family trust should include the following:

The settler - Is the title of the person in charge of setting up the trust, and also typically the person currently holding assets that will be transferred to the trust. In other words, this is you. There may be more than one settler: for example in the case of a family trust, a married couple may both be settlers.

The trustees - The trustees are persons responsible for dispensing the trust. They will also have to be certain that any wishes of the settler (as written down in the trust deed) have been carried out accordingly.

You, being the settler, are normally allowed to also be one of the trustees in your trust. In most cases the settler will also employ an unbiased trustee, which is in most cases the settler’s solicitor, Will writer or accountant. Using the services of an independent trustee helps prevent any hint of suggestion that the settler continues to have control of the family trust assets, in which case the Inland Revenue may argue that the trust is a "sham" and therefore invalid.

The beneficiaries - These are persons benefiting with the trust. By having a family trust, persons listed as beneficiaries should normally include all family members (as well as including future family members for instance future grand kids).

These people are called "discretionary" beneficiaries, which is a crucial element in family trusts. These people (contrary to the beneficiaries with in a "fixed' trust) have no right to receive any benefit under the trust; rather, trustees have the power to choose which of these beneficiaries will gain from the assets. Trustees are free to decide who is the most deserving beneficiary.

The trust deed - This is the legal document stating the settler’s wishes along with setting up the trust. Also it appoints the trustees and states their powers and duties, states the beneficiaries, & states the rules for the government and supervision of the trust. In order for the deed to be clear and to meet certain tax requirements, it would usually be a long and carefully drafted document.

The trust's assets - The trust must have some assets. When the trust is first set up, usually just a nominal sum – say £10.00. But the eventual aim is for the family trust to be made up of all significant assets.

The aim of a family trust: Is your "personal poverty"

Setting up a Family Trust is a vital part of estate planning and estate administration. The aim of you setting up a family trust is to transfer your significant assets over from you to ownership of the trust, basically, to attain "personal poverty" while at the same time being a beneficiary of the trust.
Resource: http://www.probatebureau.com/