In this article, we will explore how trusts for modern families have changed and why they are more important than ever before.
What is a Trust?
A trust is a legal arrangement in which a trustee holds assets for the benefit of one or more beneficiaries. The trustee is responsible for managing and distributing the assets according to the terms set out in the trust agreement. Trusts can be used for a variety of purposes, including providing financial security and long-term support for families and protecting assets from creditors.
Why Use a Trust?
There are several reasons why a family may choose to use a trust. Some of the most common reasons include:
- Preserving Inheritance: Trusts can provide financial protection for families by holding assets for the benefit of one or more beneficiaries. For example, a trust can be used to provide for a spouse, children or grandchildren in the event of the death of the person who created it. This can be beneficial in protecting any inheritance from relationship property claims.
- Relationship Property Protection: If you are not yet in a relationship, a trust can help protect your home and other assets from relationship property claims in the event a future relationship ends.
- Business Planning: Trusts can help with the managed distribution of a business or farm to the next generation.
- Protection from Creditors: If you own a small business, or are in a business where you may be personally liable, a trust can help protect your personal assets from creditor claims.
- Providing for Vulnerable Loved Ones: A trust can be established to provide long-term support for those who may not be able to manage their own affairs.
- Specific Purposes: Trusts can be established to provide for certain purposes, such as the education of your grandchildren.
- Charitable Purposes: A charitable trust can be set up in your lifetime to create long-term support to a cause you are passionate about and then added to later by your Will.
Blended Families
With four in 10 new marriages involving re-marriage, according to WEALTH Magazine, blended families are becoming the new norm, and trusts have adapted in recent years to accommodate these often complex situations and needs. In many cases, both partners have children and assets from their previous relationships, and it can be difficult to ensure that everyone is provided for in the event of death or disability. Trusts can be used to ensure that each person’s assets and children are protected, even if one partner predeceases the other.
Longer Life Expectancies
People are living longer than ever before. With longer life expectancies, families need to plan for the long-term care of their elderly members. Trusts can be used to provide financial support for elderly family members, including paying for medical expenses and long-term care. This can help ensure that elderly loved ones are provided for and can maintain their independence for as long as possible.
Inter-generational Investment Structures
An intergenerational wealth trust is used to help build wealth through investments over the maximum trust duration of 125 years. Over time this will help to support your children, grandchildren, great-grandchildren and so on. By building on this over time, it will help to create a greater support system for when your family needs it for generations to come.
Trusts can be used to provide financial support for future generations, including paying for education, medical expenses, and other necessities. Trusts can also be used to ensure that assets are passed down from one generation to the next, preserving the family’s wealth and ensuring that it continues to support future generations.
Protection of Relationship Property
Modern families are often faced with complex relationship property issues, and trusts can be used to protect the property rights of both partners. Relationship property is property that is acquired during a relationship and is usually divided equally between the partners in the event of a separation or death. Having a trust can help to make sure that in any scenario, both parties' property rights are protected.
With a trend of couples opting not to marry becoming increasingly common, estate planning can cater for this also. With a less traditional outlook on relationships comes a contemporary look on trusts. Without a prenuptial agreement, it could become messy if separation or death were to occur. Setting up a trust that aligns with both partners wishes will help to avoid any unnecessary headache.
Buying a Property with Friends or Family
House affordability has become a recent issue with increasing mortgage rates and increased inflation in recent years. This has led to a growing number of particularly young people or first home buyers to consider investing with friends or family. Sharing the ownership costs of a property with friends or family is a popular trend, but it can also lead to complicated legal issues. A trust can help ensure that the ownership rights and responsibilities of each person are clearly defined, which can help avoid disputes down the line. Trusts can also be used to ensure that each person’s investment in the property is protected, even if one person decides to sell their share or the property is sold.
There are many different potential setups for this type of investment so it is important to consider all options before launching into a decision. Seeking individual advice that is unbiased and separate from your friends and family is an important first step before investing.
How Trustees Executors Can Help
Trusts have come a long way since their inception and have had to adapt to meet the changing needs of modern families. If you are new to trusts or need help navigating the process, our expert team can help you.
Here at Trustees Executors, our team specialise in creating trusts that are tailored to your needs and financial goals. Our team of experienced professionals can help your family create trusts that meet your unique needs that will provide financial security for generations to come. We will help you to understand the different types of trusts available and guide you to choose the best option for your circumstances.
If you would like to understand more about trusts our team can help you to understand the legal and financial implications of trusts and ensure that all of the necessary steps are taken to establish a trust that provides financial security and peace of mind.
For more information or to contact us for a consultation contact us here.
