INSIGHTS

Trust Funds are a means of wealth preservation dating back to historic times, serving as flexible vehicles that preserve and transfer assets to future generations. Trust funds ensure that assets are protected and directed into the right hands in the present and in the future, during both the lifetime of the grantor and also long after they have passed away.

So, what exactly is a Trust Fund?

The Business Dictionary defines a Trust as a "legal entity created by a party (the Trustor) through which a second party (the Trustee) holds the right to manage the Trustor's assets or property for the benefit of a third party (the Beneficiary)."

Essentially, a Trust is a legal arrangement between three parties in which property or assets are held by a person or legal entity (such as a bank or company) for the benefit of one or more people. This makes Trust Funds strategic tools for investors and high net worth individuals who aspire to tactically hand over their wealth to their heirs and preserve their legacy. Additionally, Trusts serve the purpose of strengthening family-owned businesses, as they ensure the smooth transition of the business to the coming generations.

Variations

There are various kinds of Trusts, with some better suited to your particular needs more than others. The two main kinds of Trusts are Living Trusts, which once developed become immediately effective, and Testamentary Trusts, which only become operational after the Trustor’s (also known as the testator’s) demise, with the latter being commonly created within Wills. Determining which Trust is right for you will depend on your unique set of circumstances, what you want to accomplish, and even the laws of your particular state or country.

Purposes

Trust funds serve a variety of purposes. From estate planning and avoiding high estate taxes and probates, all the way to protecting your privacy and ensuring that your heirs and loved ones are properly cared for, Trusts are essential vehicles in helping you achieve your long-term wealth succession goals and aspirations.

Finding your Trustee

Although relying upon a family member to serve as your Trustee may seem to be an appealing option, it’s also a huge risk that you must be willing to take. Not only are family members usually lacking in legal and financial knowledge and expertise - by no fault of their own, but they also are liable to facing lawsuits, divorces or other misfortunes that could result in putting your property and assets in jeopardy. Therefore, the safest and most strategic method when setting up a Trust is through appointing a highly skilled legal consultant, who will work in alignment with your morals and values, subsequently helping you to preserve and safeguard your assets and properties for your chosen beneficiaries. Moreover, when setting up your Trust, certain states or countries have advantages over others depending on what it is the grantor is attempting to accomplish. Your experienced advisor and his team will draft your legal documents, keep records, prepare taxes, and help you make the right investment decisions, ensuring that money is continually preserved and invested and good returns are realized.