Family Trusts and Protecting Assets

Family Trusts and Protecting Assets

By: MBC Law
June 15, 2017

A family trust protects assets by transferring the legal ownership to a trustee. It is a legal arrangement that can accomplish many goals including: keeping money within the family, protecting assets from business liabilities and minimising estate taxes.

A trust is a legal arrangement however they are not separate legal entities as they do not have the capacity to undertake any legal formalities.

How does a family trust work?

The owner of the assets (settler) transfers the legal ownership to chosen persons (trustees) who are legally obliged to manage them according to the trust deed for the advantage of the beneficiaries.

Trustees can be family, friends, lawyers, and even the settler. The beneficiaries are determined by the settler and are the only people entitled to benefit from the trust. The settler can also be named as a beneficiary.

Why would you need a family trust?

There are many different trusts depending on the assets you are trying to protect and for what purpose. A family trust will help protect and control inheritance by keeping the assets in the family. Other reasons for setting up a family trust could include:

Confidentiality – You may want the names of the beneficiaries to remain anonymous until the trust terminates so you can keep your financial affairs confidential.

Protect yourself against the Relationship Property Act – A trust can minimise the risk of spouses claiming against relationship property.

Managing Finances – A trust can help protect and manage the finances of a family member who is unable to. It can also maintain control of how the assets will be used after you die.

Protection from business ventures – Trusts can protect your assets from creditors and personal liability claims should your business get into financial trouble.

Simplifying your structure – You can consolidate all your assets under one structure for easier management.

Tax – Trusts can reduce your personal liability to pay or for your beneficiaries to pay taxes on your assets.

Estate planning – Ensuring that your family are provided for once you have gone in the way you have outlined, without being legally challenged.

How do I protect my assets in a trust?

There are many benefits to transferring assets to a trust, but they do require active management and conservation. All trusts are different and are not recommended for all circumstances. Trusts need to be carefully executed under the attention of expert advice and once legally bound, they can be difficult in reversing.

MBC Law can help you protect the future of your inheritors by sheltering your assets in a family trust, and assist you with the ongoing management and maintenance. Contact one of our friendly lawyers today for practical advice for the benefit of you and your family.