What are the benefits of a family trust? What is a family trust and should you set one up? Why you should set up family trust. Cons of the Family Trust.
While a revocable living trust has a number of advantages, it also comes with certain disadvantages. A trust agreement is a more complicated document than a basic will.
You’d think a trust would be an indefinite part of your family’s security. Benefits of a family trust. Family trusts are designed to protect our assets and benefit members of our family beyond our lifetime. When our assets are in a family trust we no longer have legal ownership of them – the assets are owned by the trustees, for the benefit of our family members.
But the main benefits involve paying income from the trust to beneficiaries who have lower marginal tax rates than you do. Also, investments can grow in the trust without creating capital gains in your hands. While the trustees manage the operations of the trust, the real power is with the appointor, who can hire and fire the trustees. The appointer’s role is often overlooked and misunderstood because it isn’t usually exercised.
The time when this will be important is on the death of a trustee (or the appointor). (more…)