THE MECHANICS OF TRUSTS
What is a Trust?
Simply put, a Trust is a relationship where a person (the Settlor) transfers title property to other persons (the Trustees) to hold that property for the benefit of other people (the Beneficiaries). Provided your Trust is properly structured, it is possible for you to be the Settlor, one of the Trustees, and one of the Beneficiaries.
The Benefits of Trusts
A properly established Trust can help to protect your assets from claims made by other people such as creditors and family members, including estranged spouses.
By placing your assests in a Trust, you introduce to the administration of your Estate a flexibility not readily available under a Will.
Unlike the compulsory superannuation scheme which was resoundingly defeated in the recent referendum, a Trust allows you to control and plan for your retirement.
A Trust established to assist in meeting your children’s educational expenses may provide you with certain tax advantages. Given the likelihood of the continued increase in the cost of education, there is substantial benefit and appeal in education Trusts for people with young families.
Provided it is established for a worthy reason (such as one of those listed above), in certain circumstances, a Trust may enable income to be split with others so as to take advantage of their lower tax rate.
User Pays – Assets/Means Testing
Where eligibility for subsidies is subject to asset or means testing, provided it is established for a worthy reason (such as one listed above), a Trust may prove advantageous when seeking financial assistance.
How does a Trust Work?
By transferring your legal title in the assets to your Trustees you no longer own that property – it is now owned by the Trust. Accordingly, once your gifting programme has been completed, you essentially have no assets to be claimed against by other parties or to be taken into account when ascertaining your personal financial situation.
This information is not intended to be specific advice but rather, a general outline as to some of the benefits that Trusts can offer.
If you would like to discuss your circumstances with a Trust specialist, please do not hesitate to contact our offices.
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