Family trusts are an excellent means of passing along wealth and assets to loved ones after your death, as well as protecting your estate from outside threats during your lifetime. Here are a few major advantages you’ll enjoy when you create a family trust.
1. No Probate
Bequeathing your wealth and assets through a last will and testament means your family has to go through a protracted an expensive probate process. In addition, when a will goes through the probate process it becomes public record.
This might not seem like a problem, but if the deceased had a lot of debt, it’s reasonable to assume that creditors will come after assets as soon as the contents of the will become a matter of public record. In other words, beneficiaries could end up dealing with contestations and lawsuits that deplete any wealth and assets left to them in the will.
Family trusts are not subject to probate because the wealth and assets held in trust no longer belong to the grantor/settlor (the person who created the trust). Instead, the trust owns them until such time as they are passed along to beneficiaries so that claimants can’t disrupt the wishes of the grantor.
2. No Estate Tax
This is a biggie. Not every country has an estate tax, but for those that do, passing wealth and assets through a will could leave your loved ones holding the bag for serious estate taxes amounting to half (or more) of the value in some cases.
3. Separation of Assets
If you have a business, incorporating is a great way to ensure that business creditors don’t come after your personal assets for payment. Family trusts simply add another layer of protection against outside claims, not only from business interests but from personal relationships as well.
4. Asset Control Without Ownership
It’s natural to balk at giving up ownership of assets to a trust and a trustee, but at the time you create your trust you can make stipulations concerning the use of assets during your lifetime, generally leaving you with control of assets even as you protect them for beneficiaries.
5. A Structure for Your Needs
There are all kinds of trust structures you may enter into, but there are two main types to be aware of: income-earning and non-income-earning trusts. When you place assets that earn income (stocks, for example) into trust, there are ongoing expenses associated with paying annual income tax on earnings.
You may, therefore, want to separate out non-income-earning assets like a family home or heirloom furniture and jewelry into separate trusts that require little upkeep or administration costs following initial creation.
For more information regarding offshore accounts and banking, get in touch with us at 1-264-461-8800 or crgumbs@firstanguilla.com.
How to set up an Offshore Trust Fund for your children
If you are reading this article, I’m willing to bet that you are a person who loves your children and wants them to always be taken care of throughout the entirety of their lives. As we all know, everyone’s time spent on earth will eventually run out and we will one day leave our families behind. As grim as this may sound, it’s the reality that we all live in.
People often turn to setting up a trust in order to care for their family after they pass on. If you set up a proper trust, you can ensure that your children have access to your assets long after you have passed on. Read on, to learn exactly how to set up a trust fund.
What are you putting into your Trust?
The very first step of setting up a trust is to identify what exactly you want to add to the trust. Typically, people will add stock options, savings, real estate titles, patents, bonds and any and all financial assets that they have. What you put into your trust is what will be passed along to the beneficiaries (your children).
Identify a responsible Trustee
So who is it going to be? Who is going to be the person or institution that will be the trustee of your trust and assets? As you probably already guessed, in order to set up your trust for your children, you need to decide who will be the trustee for the family trust. A trustee in this context is a person or institution that has the responsibility of managing the funds in your trust until your child is ready to use it for say education or when he or she becomes an adult and has access to the trust.
That being said, it’s in your best interest to only assign the role to someone you trust, such as financial advisor, lawyer or trust company that helped to create your trust for you. Additionally, there are plenty of trust management firms that you can use to manage the trust for you. This can be a great way to ensure unbiased management.
Transfer your assets
Our goal in this step is to simply set up a trust or trust account with a Trustee such as; First Anguilla Trust Company Ltd, so that you can have all of your assets in one place. Some people simply set up a new banking account; some people choose investing companies. Several people also chose to create trusts in other jurisdictions like Anguilla, which has the advantage of low taxation. Our recommendation is speaking with your financial advisor before you physically set up a trust in order to make a more informed decision. Please keep in mind that your trust funds must be separate from any other account that you may have.
Get legal
This is where the rubber meets the road; in this step, our goal is to make your offshore trust fund legal.
You will want to meet with your trust manager, attorney and/ or financial advisor in this step and legally draft your trust. A good trust team (attorney, trust manager and financial advisor) will explain the different types of trust you can set up and explain the benefits of each option. Essentially, when this process is concluded, you will have a legal document that will state, the purpose of the trust, responsibilities of the trustee, beneficiary of the trust and instructions to the trustee as to how the trust should be managed.
Congratulations, you have set up your first offshore trust fund.
