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Are you interested in setting up a family trust?
Many people believe that wealthy families only use this investment structure. However, in reality, most individuals can use trusts to protect their personal, family and business assets.
A trust structure is a legal arrangement where, for example, one’s assets, cash, real estate and stocks managed by an individual or group of individuals. Family trusts are usually established for asset protection or tax purposes.
A family trust, among other things:
- Is usually established by a family member, for the benefit of the family
- Assists in protecting the family group’s assets
- Can be a method to pass family assets to future generations
- Can help with avoiding issues such as challenges to the will following a death in the family
Setting up a family trust does cost money, depending on the type of structure. There are also ongoing costs after setting up a family trust because many legal rules and regulations are surrounding these types of accounts.
Family law firms in Sydney reveal why people create trust funds
They are usually designed to separate a person’s assets from their estate. Once the settlor assigns their assets to a trust, they no longer own them. Trusts are also created to control the assets of individuals who are too young to handle their finances and protects prodigals from misusing their fortunes.
Trusts have become a popular way of arranging financial affairs and may be a tax-efficient method of distributing earnings that protect wealth for future generations.
Family law firms provide a step-by-step: how to establish a trust in Sydney?
| Decide upon original trust assets | Record all holdings and their current values to be placed in the trust |
| Appoint trustee(s) | Select an individual or institution to serve as trustee. The person selected will have significant legal authority over the trust assets |
| Decide beneficiaries | Gather a list of people who are entitled to receive benefits and include a percentage breakdown of assets for each beneficiary |
| Trust deed |
Establish a trust deed. This is a legal document outlining the rules that the trust, and the powers of the trustee. The deed outlines important information including:
The deed must be signed by all trustees and can be reviewed and updated as required. These deeds should be written alongside a lawyer in Sydney, with specialised legal and knowledge of trusts. |
| Stamping | Stamp duty may be payable on the trust deed, depending on the state. |
| Register as a business | Similar to other Australian business structures, an ABN and TFN and business name is required for the trust |
| Bank account | Once the trust has been established, a trust bank should then be opened in the trustee’s name |
| Trust activity | The trust then becomes operations and can accept contributions or make investments, subject to terms described in the trust deed. |
It is also essential to understand the roles and responsibilities of each member of the trust.
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The settlor: This person provides the assets to the trustee on the terms and conditions set out in the trust deed. The settlor implements the trust deed and usually has little involvement in the trust
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The trustee: responsible for the trust and assets. This person has the control to conduct the trust and manage assets. Since trustees have authority and powers over the assets, it is essential to choose a responsible and unbiased person to take the role.
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Beneficiaries: these people are listed in the trust fund and can benefit from the assets. It is up to the trustee to decide when to distribute a benefit to the beneficiaries and how much is given.
It is essential to obtain help from a family lawyers sydney or family law firm in Sydney to help provide financial and legal advice before stepping into this complicated legal structure. Establishing a family trust is a big decision and needs to be carefully considered and arranged. Prominent Lawyers in Sydney have the required knowledge and information to help advise and assist you throughout the way.
Do you want to set up a family trust?
At Prominent Lawyers, our lawyers can guide you along the way, assisting you to take the correct steps throughout the process. We aim to make a difference in our client’s lives and help take the weight off your shoulders by using our legal expertise to guide you along the process.
Contact us 1800 77 66 46 to find out more.
