Understanding How The Family Trust Works
If managing your assets the right legal way is your concern
, you may consider a trust arrangement. A useful form of this oft-used estate-planning device is the family trust. Known more commonly as the living trust, this arrangement is simple and beneficial for all the parties involved.Here is a brief overview of how these trusts function, as well as their advantages.
In most cases, these trust come of use to protect and distribute family property. An individual, or individuals, transfer the title of their assets to the trust. The legal term for these individual(s) is grantor. However, they are also referred to as trustor, creator, settler, and such other names.
These are living trusts. Therefore, the grantor can function as the trustee during their lifetime. You have the responsibility to manage the assets. This implies that you have the legal right to buy or sell, borrow or transfer the trust property. The revocable clause also makes it possible to change the terms of the trust deed according to your wish.
Only after the death of the grantor, the management of the trust property passes on to the successor trustee. The selection of this trustee is also as per the dictates of the grantor. Only in one circumstance does the successor trustee take over the responsibilities of managing the trust. This is if the grantor is mentally incapacitated.
The beneficiaries of the family trust legal are usually other members of the family. In this arrangement, the grantor, or the trustee, decides on the percentage provided to a particular beneficiary. In case the beneficiary is a minor, the grantor has the responsibility to control and manage their portion of the assets.
However, one thing to keep in mind is to avail legal help from a professional when you are planning such a trust. Only a competent estate-planning lawyer can help you understand the legal implications when coming up with the trust document. The do-it-yourself may sound to be too good to be true the problem is, it often is so!
If you are still thinking why opt for a family trust, here are the reasons.
It helps avoid the probate process (which is pretty lengthy and expensive)
It helps maximize tax exemptions
It helps avoid public disclosure of property details after death of grantor
It helps manage assets belonging to a minor
It helps manage assets if the grantor is left incapacitated
The simplicity of the family trust and its various benefits give it an edge over others.
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