Heritage Law

Family Trusts

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The Importance of a Family Trust Lawyer

Having a family is a wonderful gift but also sometimes can be a difficult task, as a parent or guardian, you are responsible to take care of your family’s needs.  An important consideration is that in the unfortunate event of the death of the parent or guardian, how would your family’s different assets be divided among each family member?

This is where a Family Trust can help, providing you a way to divide your assets in a structured way.  These trusts are a useful tool in estate planning and are a great way to distribute the assets to your spouse, children, even charities.

What is a Family Trust?

A family trust, as you might assume, names your family members as beneficiaries.  As a result, children, brothers, grandchildren, cousins, aunts and uncles, spouses, and other family members may be eligible. 

A family trust is a popular estate planning tool that can protect a clients’ assets and declare how said assets will be allocated after their death.

There are numerous advantages to establishing a family trust, including guaranteeing that the money is distributed to the relatives and avoiding public exposure of assets held.

For this reason, a trust can be a better option than using simply a will.  A properly funded trust is not subject to probate, unlike a will.  Therefore, a trust can also provide more privacy for families as it keeps estate information private rather than becoming a public record.

Advantages and Disadvantages of Family Trusts

Advantages

Establishing family trust is both advantageous and disadvantageous for the parents and grandparents.  Knowing these advantages and disadvantages can help the client choose whether to go through with establishing it, or not.

  • Protecting Family Members – Family trusts can help protect vulnerable beneficiaries who might make bad financial decisions if they had control of assets in their name.

  • Confidentiality– These trusts are not available as public record.

  • Asset Protection – Family trusts are common mechanisms for securing assets in the event of bankruptcy or company failure.

Disadvantages

  • Liability Distribution – The trust is unable to distribute tax liabilities to beneficiaries

     

  • Family Troubles – When family disagreements develop, running the trust can become very challenging

     

  • Potential Taxes –  Any trust income that is not given is taxed at the highest marginal tax rate.

     

  • Other tax implications – for example up to 66% of distributions to minors are taxed

Why Set Up a Family Trust?

Unlike what some might believe, family trusts are not exclusive to the wealthy.  They can be used by parents and grandparents from any economic group, to help them protect assets and manage different properties.

A family trust is a legal document that benefits the family members, spouse, or children of the individual.  It’s also used to protect the assets of the family from the probate process and delaying taxes.

With the help of family trusts, individuals can be sure that the assets they have accumulated in their lifetime can be passed down to their families or beneficiaries.  Ensuring the future of their respective families with the assets they would leave to their kin.

How Many Parties Are Involved?

A family trust is made up of 3 parties: the grantor, the trustee, and the beneficiaries.  They are:

  • The GrantorA grantor is an individual who legally establishes a trust and decides how the trust will function, including the guidelines of the trust, whom the trust will benefit (the beneficiaries), and is finally responsible for transferring asset ownership to the trustee.
  • The Trustee – This is the person in charge of overseeing the trust’s assets on behalf of the beneficiaries. The trustee is also responsible for transferring the assets to the beneficiaries
  • The Beneficiaries – Beneficiaries are the ones who get financial benefits from the trust, similar to the beneficiaries of a life insurance policy. Beneficiaries can also receive different assets like real estate, businesses, etc.

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Is a family trust revocable or irrevocable?

Family trusts are a form of living trust that may be irrevocable or revocable based on the clients’ preferences, but the most common form of a family trust used is a revocable living trust.  A revocable living trust goes into effect during the individual’s lifetime.

A revocable trust can be changed or dissolved at any moment by the grantor.  In a revocable trust, a person can serve as both the beneficiary of the trust as well as the trustee.  They may also designate a successor trustee to take over if the grantor becomes incapacitated or dies.

An irrevocable trust cannot be changed or canceled by the trust grantor, as the assets in the trust are now owned by the trust and are under control by the trustee.  In an irrevocable trust, you must appoint someone else other than yourself to serve as trustee.

We are here to help you.  Please contact Heritage Law and start planning for the future today.

We work one on one with you directly to ensure your family trust is completed from start to finish.

We ensure the future plan we put in place makes the most financial sense for your property and your family long term.

We take our time to explore all available options as we strive for excellence. We work hard so you don't have to.

Heritage Law Can Help You Establish A Family Trust

Are you a parent looking for solutions to protect your family from estate taxes and ensure your estate is properly managed? 

If so, it’s time to meet with an estate planning attorney.  We can help put together a family trust that provides for your loved ones during times of crisis.  With an experienced estate attorney by your side, you can have confidence in navigating any legal challenges or confusing processes.

A family trust might be exactly what you’re looking for.  Planning ahead is the best way to make sure your children are taken care of.  Allow us to help you set up a family trust and we will help guide you through various options to protect your family and children.

For a free consultation please fill out our contact form. We do not charge for consultations and we would love to provide legal advice on how to protect your estate today!

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