Family trust is a legal device used to avoid probate, for estate planning and to protect assets.
Trust is a legal arrangement where a person transfers his right to manage his assets to the trustee (or actual ownership for irrevocable trust), the trustee holds and manages the assets to protect the beneficiaries’ rights.
Trust can be categorized in revocable trust and irrevocable trust:
- Revocable trust
This type of trust allows the settlor to cancel or revoke the trust. After the trust is revoked, the trust assets will be transferred back to the settlor. Nonetheless, once the settlor passes away, the trust becomes irrevocable. Revocable trust is commonly used to avoid probate.
- Irrevocable trust
Irrevocable trust disallows the settlor to cancel or revoke the trust, unless the trustee and the beneficiary agree otherwise. The trust deed would declare explicitly, the irrevocability of the trust. Irrevocable trust can also be used to avoid probate and can be an advantage in assets protection and tax planning.
Family trust involves inheritance of assets and thus requires careful planning. Please contact us for more information.