Specific Reasons of Setting up a Trust
How a Special Purpose Trust Helps You?
Special Purpose Vehicle Trust
The general purpose of any trust is to manage and preserve property (typically money) for the benefit of one or more persons. However, a trust is usually set up for a special purpose that meets your specific needs or the needs of your beneficiaries. You can use a trust for a variety of special purposes including minimizing taxes, protecting assets from being squandered, or providing liquidity to the family for the period your will is being probated or any other purpose.
Some Specific Purposes of these Trust could be:
- You wish to create a fund to take care of a certain person for example, a distant relative who took care of you when you were young.
- You wish to free your family members from the burden of paying your outstanding loans and liabilities e.g housing loans.
- You wish to ensure that upon your demise, the needs of your family are well taken care of while waiting for Probate or Letter of Administration to unfreeze your assets.
- You want to establish a fund for various purposes such as education, medical assistance, maintenance and even for purposes of charity, and also for different categories of beneficiaries for example, family members, special needs children, future generations and relatives.
- Managing Assets: If your beneficiaries don’t have the capability or desire to manage the assets you’ll be giving them, having trustees manage those assets can solve the problem. Perhaps your kids are minors, or have a disability. You may want to manage the assets while you’re alive, but when you’re gone, a trust can provide proper management if necessary.
- Protecting Assets: If you want to protect assets from creditors, marriage breakdown or from those who might influence your beneficiaries, a trust can be an effective vehicle.
- Controlling Distributions: If you don’t trust your beneficiaries to directly own the assets you want them to have (perhaps because they are minors or spendthrifts), you can distribute assets to them over time through a trust.
- Providing Privacy: After your death, your will is likely to be probated. In this case, your will becomes a public document, along with the value of the assets that formed your estate. Further, certain people may be entitled by law to receive a copy of your will. A trust agreement, however, is a private document and can keep information confidential. Some people replace their wills with a trust.
- Avoiding Probate: Assets held in a trust fall outside of your estate and, therefore, do not require probate or the payment of probate fees.
- Immigration or Emigration: When a person and his/her family move to another country, it is often an ideal time – maybe the only time – to set up a trust in order to avoid taxation in the destination country, thereby preserving the family wealth and providing flexibility in its management. Such arrangements require detailed professional advice and guidance.
- Preservation of Family Assets: Trusts may be used to own specific assets, such as land or an interest in a family company, which would not be appropriate or practical for a settlor to divide between individuals. The use of a trust enables such individuals to enjoy the assets despite the fact that they do not own them. A trust will also help to maintain the capital value of such assets for future generations.
- Corporate Structures: Business arrangements can utilize trusts as holding vehicles for other entities or structures. This can help to maximize efficiency of planning and control of interrelated entities, while also maintaining confidentiality and protecting beneficial owners. For example, a trust may be the sole shareholder of an Company, thereby allowing beneficial owners to discretely enjoy the benefits of their business.
Create a Special Purpose Trust with Nexgen Estate Planning Solutions where you can set up a fund which can cater for the above situations for your loved ones.
How a Special Purpose Trust Helps You
- You can create a fund for any Beneficiary which is not limited to family members only.
- It is fast and convenient. The assets in the Special Purpose Trust do not form part of your estate and are not frozen upon your demise. It can be used immediately to settle your liabilities without burdening your loved ones.
- It can even be used to finance the application for Probate or Letter of Administration without requiring your family members to borrow or pay from their own funds.
- You can plan for multiple level of beneficiaries and also for multiple purposes
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