What You Need To Know About Family Trusts And Should You Have One
Many people talk about the idea of a family trust, thinking that it is a good way to protect their assets. That is true but it is not a simple concept. It is also one that can lead to expensive legal problems and battles with the IRD if the trust is not set-up or managed correctly. It is definitely a good idea to talk to one of the South Auckland family trust lawyers to understand the benefits and also the commitments.
To begin with, let’s explain what a Family Trust is before we move onto whether it is necessary to have one. The brief explanation of a Family Trust is a type of trust that you set up to protect the assets in your family, for both future and current members. So far, this sounds pretty simple and basic, right? If it’s really so simple and basic, then why do so many families not have one? Below are a few thoughts and advice from an experienced trust lawyer. This isn’t legal advice. If you want more information you should chat with one of the South Auckland family trust lawyers.
So let’s start getting into why it may benefit you to spend the time and expense of setting up a trust. You should also be aware of the main reasons to choose this option and whether its something that matches up to what you need. From here you can talk to a trust lawyer who will tell you more about the process.
Reasons To Set Up A Family Trust:
– Protect Your Assets Against Financial Claims
When transferring property or funds from your personal name into a family trust, then these funds are protected and cannot be touched by creditors. However, trustees are still liable to manage the servicing of any debt such as a mortgage. The ownership of the property passes into a trust which means it cannot be used or taken back to cover the shortfall.
– Protect Assets Against Property Claims Made By Relatives
If you state in a will that you are passing your property or assets to one of your children, your spouse might be able to lodge claim against or challenge that will. However, when the funds or property was passed into a Family Trust, only the beneficiaries have a claim on those assets. If your children are the beneficiaries but your spouse is not, the spouse and especially a former spouse, will have a hard time getting access to those assets. Thus a family trust is a good way to protect your legacy and pass it to your children rather than an ex-spouse.
Limiting Access To Assets For Young Children
If you have bequeathed money in your will, you have no control over how these funds will be spent. Most of us know of people that are not wise with money. O manage the spending of the assets, the rules of the Family Trust may allocate those assets in specific amounts over time. For example, the beneficiary might be granted an annual income from the Trust. In this way, the beneficiaries cannot spend their inheritance at once. Rather they can benefit from an investment return which the trust generates or they may receive lump sums at certain life stages, or receive a lump sum once they have reached the age that you have specified in the trust.
If you are thinking about setting-up a Family Trust, you must get good legal advice. One of the top South Auckland family trust lawyers is McVeagh Fleming. You can get more details from their website.