What are family trusts?

In the most basic sense, family trusts are structures designed to help you protect your assets while you are alive and living and allow you to pass them along to loved ones at some time in the future.

Family trusts hold assets as a type of custodian

There is a lot more to trusts, though. For example, a last will and testament has virtually the same purpose as a trust, but it is structured and administered differently. Whereas assets listed in a will stay in the name of the owner, a trust structure holds assets, virtually claiming ownership, until such time as they are passed on to beneficiaries. This is not to say that the original owner can't retain usage of assets until they are passed along, but there is a level of protection involved. Importantly, creditors cannot claim assets held in trust because they technically no longer belong to the person who created the trust.

The custodian role provides asset protection throughout your lifetime and beyond

In other words, family trusts help you to create a form of asset protection that persists throughout your lifetime and beyond your death, something that a last will and testament can't offer. There are a variety of assets that can be placed in trust structures. Even if you already have a will in place, you might, for example, want to create a family home trust. Your primary residence is probably your greatest asset, financially speaking. This makes it a prime target for creditors seeking repayment of debt. If creditors can find a way to lay claim to the equity in your home, you could lose it. Obviously you don't want this to happen since it will have a significant impact on you and your family.

How to protect your main asset - your family home

The easiest way to protect your home from this type of loss is to place it in a trust structure with your family (spouse, children) or other loved ones named as beneficiaries. The trust then "owns" the home. Even though you'll continue to live there, the property is held in trust. Since it's no longer owned by you personally, it is protected from creditors seeking to claim your personal assets for repayment of debt. You can also place a wide variety of other valuable assets into family trusts for similar protection.

Protect your personal assets from potential business risks

There are several reasons to use this form of asset protection. If you fear claims against your personal assets due to business debts, personal debts, or even family squabbles, for example, you might want to set up a family trust to ensure that assets go to intended beneficiaries. You can also keep your estate private since it won't go through probate (as can happen with a will). Plus, you can make all kinds of provisions, such as passing along wealth to children at specific ages or for specific purposes (schooling, home purchase, etc.). Trusts can be simple or complex, depending on your particular circumstances. So it's always best to speak to a professional about the trust structure that's right for you, your family, and your assets.

So why not learn more and register with TrustUs today.

After all, it's in your hands.