A family trust is set up by a trust deed for the benefit of all the beneficiaries. The beneficiaries are usually members of the one family.
What are the advantages and disadvantages of a family trust?
The advantages of having a family trust include:
- The trust makes provision for the whole family;
- It provides children with the benefits of family wealth without losing control over key assets;
- Creates a legal framework for the family assets which will last for a long time;
- The trust protects assets against actual and potential creditors;
- Creates a tax effective structure;
- Avoids any problems with probate; and
- Helps with estate planning by easy intergenerational transfer of assets.
The main disadvantages of a family trust include:
- The costs involved, such as the cost of setting up the trust and the ongoing fees; and
- Loss of flexibility – all transactions are governed by the trust deed.
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