If you want your family fortune to benefit future generations, you need to prepare your estate plan accordingly. It means looking beyond the traditional will when passing over your estate to your kin.
A trust can help you achieve your objectives without the uncertainties of a will. Unlike wills, trusts are more guaranteed to provide for future generations due to their legal and asset protection benefits. Here is what you need to know.
How a trust works
Think of a trust as a separate legal entity that holds your property on behalf of your loved ones, who are only the beneficiaries. As the person setting up the trust, you can dictate its terms and what happens to the assets held in the trust.
One of the best things about trusts is that the ownership of trust assets legally belongs to the trust and not the beneficiaries. Therefore, your kin cannot sell or lose ownership of the trust assets in your absence. For instance, a creditor cannot repossess them to recover a debt owed by a trust beneficiary since the assets belong to the trust.
In addition, the individual or entity administering the trust assets (the trustee) is legally obligated to do so in the best interest of the beneficiaries. It means you do not have to worry about your immediate beneficiaries mismanaging or misappropriating your family wealth.
Get the proper guidance when setting up a trust
It is worthwhile to learn more about the different kinds of trusts and how they can help you achieve your goals if you are contemplating including a trust in your estate plan. Your choice of trustee is equally crucial.
Most importantly, you must follow due process when establishing a trust. Trust deeds are legal documents and can be invalidated if they do not meet the legal requirements. Having the necessary information will help avoid blunders that could derail your plans and protect your loved ones’ interests.