Reasons to Set Up a Family Trust
We all come to a point in our lives where we begin to think about protecting and managing our assets for the benefit of our family and/or for future generations. This is where a family trust comes in. A family trust is a trust which is set up specifically to benefit members of a particular family. And here are a few reasons to set up a family trust.
Protection from Creditors
When a property is transferred to the trust, it’s no longer owned by the settlor or the beneficiaries. What this means is that it should not be subject to claims from future creditors. This is provided that particular conditions are met at the time of the settlement. With this protection in place, the settlor has the option to undertake an occupation, venture, start-up with a higher risk with no risk over their trust assets.
Relationship Property Claims
Again, this is another protection benefit. In some circumstances, should you gift your children with assets during your lifetime. These assets may become available to their partners. This happens under particular relationship property laws should their relationship come to an end. So, by placing these assets in a trust instead of directly in the name of your children. The benefits of these assets can continue to be enjoyed by your children without them becoming a part of their personal property and in turn, will not be subject to claims from partners.
If I dive a little further and you’re married or in a civil union. More than likely that part of your assets will be relationship property. So, should you divorce or separate this relationship property must be divided into two. By transferring the family property into a family trust with CityTrust.ie. The assets or home become assets of the trust instead of just personal property. Thus, protecting it from relationship property claims which are subject to applicable relationship laws.
The reason many people set up a family trust is to benefit other members of their family. You can use a family trust to provide for children or other members of your family who may need medical care. Have special needs or who are simply unable to manage their own affairs due to either age or infirmity. You can also make provisions to protect against other family members who intend to assume control of these family assets for themselves following the death of the settlor.
Spendthrift Beneficiaries Protection.
If you have any concerns over how a family member manages their own financial affairs. Trusts can provide protection in the long term for family assets. You can provide for the income and capital needs of family members via the trust as their needs arise. This is instead of handing over your assets to your children who may use this money in a reckless manner which could leave them in a poor financial position in the future.
Trusts Can react to Changes in the Law
Today’s modern trust deeds usually have included in the provisions which allow for changes or variations in the trusts to deal with any changes in the law.
Planning your Estate
As previously mentioned, and which are subject to applicable bankruptcy and family law provisions. Assets settled on a trust no longer form part of the settlor’s estate when he or she passes away.
It’s always important to remember when you’re building out your wealth planning objectives. Firstly, you need to decide on whether a trust is a right vehicle to develop and meet your objectives. You should also take time and consider how the trust is established and how it will be managed in the future. Taking the time to do this could eliminate any chance of the trust being defeated.
Finally, contact us today to find out more about how CityTrust can help create a tailored SPV or trust to meet your needs and reasons to set up a family trust. We also provide a full range of trust and corporate services.