Using A Family Trust To Protect Your Family’s Future
A family trust can be an effective tool to safeguard your assets for your family’s benefit – now and for generations to come. It provides protection, financial security, and peace of mind while keeping your legacy intact.
Thinking of setting up one? We help families establish and manage trusts that comply with the latest legal and tax requirements.
What is a Family Trust?
A family trust enables you to transfer ownership of your important assets, typically your family home, shares, and cash, into a separate legal structure. Trustees will then manage the assets on behalf of the beneficiaries (who can include you) you name. Key roles in a trust are:
- Settlor(s), who are the people who create the trust and subsequently transfer assets into it.
- Trustees are people or organisations who manage the trust and its assets in line with the trust’s objectives and settlor’s wishes (laid out in a trust deed).
- Beneficiaries: Individuals, often family members, or entities that benefit from the trust.
The settlors’ wishes and objectives and key requirements are detailed in a trust deed. The trust deed is a legal document which specifies how the assets should be managed.
Why Create a Family Trust?
Family trusts offer several benefits, including:
- Asset Protection: It shields your family home and other valuable property from creditors and business risks.
- Securing Education Funds: Your trust can pay for your children and grandchildren’s education.
- Preserve Inheritance: It can ensure your wealth is passed to your children, not their partners.
- Minimise Estate Risks: A well-written trust will reduce nasty disputes and claims on your estate after your death.
- Supporting Vulnerable Members: Your trust can provide financial stability for family members who require extra care.
Trusts especially benefit families with complex financial arrangements. Or those want to ensure future generations use the assets responsibly.
How Family Trusts Work
Creating your trust begins with preparing a trust deed which is a legal document that:
- Documents who the trustees and beneficiaries are.
- Details the rules for managing and distributing trust assets.
After the trust is created, assets like your family home and other valuables are transferred into it. This involves “selling” the assets to the trust and addressing the resulting debt via gifting. Professional advice ensures this is handled smoothly and in line with your goals.
Trustees manage the assets according to the trust deed. Their responsibilities include acting impartially, maintaining records, and making decisions in the beneficiaries’ best interests.
They must understand the legal obligations outlined in the Trusts Act 2019, which has increased reporting and administrative requirements. Non-compliance with the trust deed’s objectives and statutory requirements may expose the trustees to the beneficiaries commencing legal action against them.
How We Can Help
We help family trust members to comply with their statutory tax and legal obligations, including:
- Preparing financial statements, tax returns, and important trust minutes.
- Managing the trust’s statutory registers and asset details.
- Tailored advice on establishing trusts and ongoing administration and management.
Costs and Other Considerations
Family trusts provide significant benefits. But they also come with responsibilities. Transferring assets to a trust means relinquishing personal ownership.
Trustees must manage the trust carefully. They must maintain records, and comply with regulations, all of which require time and expertise. Creating a family trust involves legal and accounting fees. It’s important to weigh up the costs and benefits.
Is a Family Trust Right for You?
Family trusts are not suitable for everyone.
If you’re unsure if one is right for you, we can help guide you throughout the decision-making process. Trusts require clear objectives, professional help, and ongoing administration to comply with complex legislation.
Next Steps
Don’t leave your family’s future to chance. Book an appointment with us so we answer your questions and help you explore your options for a family trust.