Trust Planning

Why Trust when you already have a Will?

Beside a Will, setting up a Trust is the next important instrument to consider when implementing your Estate Plan. A Trust offers more flexibility in that your assets can be managed and distributed during your lifetime or thereafter.

What is a Trust?

A Trust is a legal arrangement where one party (the Settlor) declares that a Trust is set up (by signing a Trust deed) and transfers the legal ownership of his asset or property to another person or financial institution (the Trustee) to manage, use and distribute for the benefit of some other persons (the beneficiaries).

The Trustee becomes legal owner of the property but the beneficial interests and enjoyment are with the beneficiaries of the Trust. In certain situation, the Settlor may appoint a ‘Protector’ to whom the Trustee can look for advice as well as to protect the Trust when the need arises. The powers for which the Protector’s consent are required in matters such as distributions of capital and income, the additions to or exclusions from the class of beneficiaries, the removal and appointment of new Trustees etc.

A Trust can exist in 2 forms:-

Trust Deed (Inter vivos Trust or Living Trust) – Trust exists during the life time of the Settlor (maker of the Trust) and takes effect immediately when the Trust deed is signed by the Settlor and the property transferred / conveyed to the Trustee or

Testamentary Trust – The Trust exists in the Will and takes effect on the death of the Testator. It is always revocable before death as it is in a Will.

Why use a trust?

There are many reasons why people set up a Trust. Some of the common reasons include:

  1. Asset Protection Individuals who are in business and professionals might want to ring-fence the assets they have set aside for loved ones so potential creditors cannot touch these assets.
  2. Preserving Family Wealth

    One of the most important reasons for using a trust is to protect your family’s assets, guard your wealth and eliminate the possibility of your assets being mismanaged, misused, or dissipated by spendthrift heirs. A Trust can provide your heirs with a regular income while preserving the capital for subsequent generations.
  3. Business Succession planning This involves planning for a smooth transfer and succession of your business interest in the event of your untimely death or incapacity. By transferring ownership of a company into a Trust, the business owner can be assured that the company will continue to function after the death of the primary owner. The Trust can provide for distribution of income from the business to family members or other beneficiaries.
  4. Confidentiality

    Confidentiality is the key benefit of Trusts. The setting up of a Trust is treated as a private matter between the settlor, the trustee, and the beneficiary – The existence of the Trust, the terms and provisions, Trust assets as well as identities of trustee, protector, settlor and beneficiaries are kept confidential.
  5. Philanthropy

    Instead of making a one-time gift to a charity, you can assign assets into a trust that will generate a regular stream of income to fund your Church or favorite charity. This creates a legacy that will survive long after you are gone.

Trust structuring is highly diverse and can apply in a wide scope of circumstances to suit your different estate planning objectives. It can provide you with the peace of mind in knowing that you have provided a lasting gift to your spouse, family, loved ones and favorite charity or religious organization.

Will Writing

Trust Planning

Planned Giving