The Benefits of Trusts
A trust is a fiduciary arrangement that allows a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries.
The main reason one forms a trust is to make gifts or preserve wealth for future generations. Other aims of trust squarely fall into areas of charitable giving. There are also other benefits such as avoiding probate delays, confidentiality, and tax planning.
Avoiding Probate Delays
The trust is legally owned by the trustees, so the assets can be administered independently of a will and independently of the death of the trust settlor in case of living trusts. Thus, proceeds can be available for distribution to the trustees without delay. The trust deed is a legal document that defines the trust such as the trustee, the beneficiaries, the settlor, and the contribution of the settlor’s assets. The letter of wishes stipulates how the trust assets will be distributed and the settlor has full control over the conditions to be met before trust assets are distributed to the beneficiaries. Assets not under trusts cannot be distributed to beneficiaries of the estate without a grant of probate. For individuals with assets in more than one jurisdiction obtaining probate can be a costly and time consuming process.
Unlike a will, there is no public record of trusts.
In many countries the laws of succession define specific rights of heirs. Financial provisions must be handed down to dependents. The creation of a trust governed by laws of a country other than that in which the individual lives can sometimes be used to provide more control over who can benefit.
Residents domiciled in jurisdictions with inheritance or estate tax have to pay tax on all possessions, including offshore assets. Offshore assets placed into a trust can help one avoid inheritance tax depending on the type of trust chosen. Non-domiciled individuals can avoid the inheritance tax in the same way as long as the asset remains offshore and in the trust. Even if the settlor becomes domiciled, the assets in the trust are still protected from inheritance tax since they legally do not belong to the original settlor anymore. Learn More: https://www.fidelity.com/estate-planning-inheritance/estate-planning/trusts https://www.youtube.com/watch?v=rb11K_vW7Ow