What is a Trust’s purpose ?
A Trust is a legal arrangement in which one party, known as the settlor, transfers assets to another party, known as the trustee(s), who manages those assets for the benefit of third parties, known as the beneficiaries. The purpose of a trust can vary depending on the specific goals and circumstances of the settlor, but there are several common reasons for creating a trust:
Asset protection: Trusts can be used to protect assets from creditors, lawsuits, or other potential risks. By placing assets in a trust, the trustor can ensure that they are held separately and shielded from personal liabilities.
Estate planning: Trusts are commonly used as an estate planning tool to manage and distribute assets upon the trustor's death. They can help avoid probate, provide for the smooth transfer of assets to beneficiaries, and allow for more control over how assets are distributed.
Privacy: Unlike wills, which become a public record when an Application for Probate is filed, trusts can provide a higher level of privacy. Trust documents are typically not publicly filed, allowing the trustor to keep their personal and financial affairs confidential.
Tax planning: Trusts can be structured in a way that offers potential tax benefits.
Providing for minor or incapacitated beneficiaries: Trusts can be established to manage assets for the benefit of minors or individuals with disabilities. These trusts, ensure that the assets are used for the beneficiary's well-being and financial support while providing oversight by a trustee.
Philanthropy: Charitable trusts allow individuals to contribute assets to a trust for charitable purposes.
Please contact us at Walker Murdoch Law to ensure that a trust is properly set up to achieve your intended goals.