Trust for Family members
In recent years, the trusts are becoming more well-known due to their features that can override inheritance tax and gift tax which is otherwise is taxable against the beneficiaries under certain jurisdiction if it is transferred via the will.
In lieu of this, aristocrats often chose to pass on their inheritance to their children via trusts instead of will. Even though venturing into trust involves recurring costs such as service fees, however it is still considered cost effective as it provides more benefits such as tax savings and confidentiality.
For those with high-risk profiles, protecting their accumulated wealth from being attached to any litigation is a usual concern. Hence, placing their wealth in trust will indirectly alienate the assets from such claims as the ownership is transferred to the trust and the beneficiaries are guaranteed income from the trust.
As for family businesses, placing their shares in the form of trust will ensure its continuance despite any potential disputes amongst the family members as well as bankruptcy. Hence, placing the shares in the form of trust will not on benefit the family members as beneficiaries but will also preserve the family business for generations to come.
Another benefit a trust provides is confidentiality, as it can be established overseas and privately. Furthermore, trust assets would not be liable to any probate proceedings when the settlor passes away, minimising exposure to the public eye.
How Long Does a Trust Last ?
However, take note that a trust is not perpetual. Trusts created after 2004 last for 100 years. Subject to these new laws, the duration of a trust is determined by:
The provisions in the trust deed
When trust assets have been fully distributed to beneficiaries
When all beneficiaries unanimously consent to the termination of the trust