Family Trusts - Why You Should Have One

A family trust is the relationship in which trustees are obligated to be responsible for a property for someone else?s benefit (beneficiaries). The beneficiaries do not receive a fixed amount from the trusts, instead it is in the trustee?s discretion and judgment which beneficiary shall receive what amount of money. But the beneficiaries are only those who have been included in the trust deed.

To further understand the family trust, let us know what are the important roles included in the family deed.

The settler is the person responsible for putting-up the sum or property in a trust for the beneficiaries.

The trustee is the one responsible or can be the owner of the money or property in the trust. Though he cannot have the benefits, he will be the one to sign all papers and documents regarding the trust. The main responsibility of the trustee is to make sure that he acts for the beneficiaries bet interest.

The appointer is the one responsible for appointing beneficiaries of the will. He can also remove one beneficiary and appoint another. This usually happens when a trustee is experiencing bankruptcy, or has died. The appointer is named in the trust deed.

The beneficiaries are the one that accepts the benefits from the property or the money in the trust. They actually do not have interest on the property yet, until such time that the trustee makes the decision to distribute the money or property. Not all beneficiaries named in the trust will receive the amount. They will have to be considered first according to the discretion of the trustee. The general beneficiaries are the beneficiaries named in the trust deed and are qualified to receive the income but will still be approved by the appointer. The rest are the beneficiaries who automatically receive the amount from the trust.

The trust fund is the accumulated amount of money or property, including the capital, interest and other properties included in the trust deed.

The trust deed is the terms and agreements agreed by the settler and the trustee. It is the document that contains all the conditions and other provisions in the relationship of the parties concerned. This is where all the important things are documented including the responsibilities and the capabilities of the trustees, the appointer, and the beneficiaries.

The trust deed can be used by either companies or just a simple family. It can be used to protect assets of the company or the family so that the beneficiary is not left with nothing during cases of bankruptcy. The trust fund cannot be taken by creditors during bankruptcy unless the debt is related to the trust fund or called a trust debt. Otherwise, it is not included in the liquidation of assets.

Preparing a trust deed is not an easy task to do. It includes lots of legal work and you need to understand legal stuffs. You can consult a lawyer or a legal adviser in case you need help in understanding the legal responsibilities and benefits of the family trust.


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