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Succesion to ownership of Assets - by Trust or by Will ?

Trusts can run for 80 years and thus protect Assets for Settlors. They allow Settlors a say in how their children and grandchildren spend trust monies and deal with other trust Assets.

A Family Trust is a valuable tool in financial planning as it enables Assets to be spread effectively amongst a Settlor's family members, without allowing those family members unlimited access to Trust funds during that Settlor's lifetime. This will prevent excessive spending, and also protect when the Beneficiaries are incapacitated or when Beneficiaries expect to benefit only at a later stage during their incapacity, in old age, or after death of the Settlor of the Trust.

One method which is often used by concerned parents ,who are  Settlors of a Family Trust , is to state that the Beneficiaries, or some of them, can only take Income from the Trust Assets, and not chunks of  the Capital that forms the fund of a Trust. Another way is to appoint an outsider to give some guarantee as to how monies are to be spent. It can be a concerned family member or even the Housekeeper of an older adult or an incapacitated person. There are specialist organizations in the Mental Health field which provide such long-term support, long after the death of the Settlors.

Such matters should be set out in a Memorandum of Wishes, which guides the Trustees when they run a Trust. DVD recordings and Letters of Intent can giver additional insight into how Trustees should look after Beneficiaries in a Trust, that they help to administer.

This planned succession to ownership of Assets through a Trust can thus be effectively managed.  Trusts provide the greatest safeguard that your Intentions, Wishes and Directions will indeed be followed.  Your appointed Trustees will be bound by your Directions and Wishes  as you have set them out in Documents and recorded Statements  They will have discretion on how they implement your wishes  to benefit the ones that you have chosen.  This method of succession is also much  safer and less expensive than holding on to the Assets, and only transferring them by means of a Will, at time of your death.

In summary when the method of a Last Will is chosen then there are three potential dangers:

a. The Asset can be disposed of in other ways by someone's surviving spouse, partner or beneficiary after you have died. This is a major point of concern for many older adults ,with a younger partner or spouse, when that remaining spouse can be prone to the influence of a new partner, after death of the Testator. It is also a cause of worry for  many aging parents , who have children or grand-children with totally different values and attitudes, than they themselves have towards the spending of their money.

b. A Will can be contested in a Court  of Law after death of a Testator. It always leads to much uncertainty, delay for Beneficiaries and a high cost to all concerned.  Most of these cases are settled out of Court. It often results  in Wishes of a Testator not completely being followed or not at all.

c. Even if an estate is not contested and matters run smooth, the Executors of the estate may interpret the Directions of a Testator different, because very little is known about the intentions of the deceased person.  Executors of an estate do not take a long-term view.  Where the Settlors intend a long-term view then a Trust with a probable life-time of 80 years is the superior legal protection instrument. Some asset owners try to overcome this by giving directions in their Wills, that cause a Trust to come into being on their deaths. There are many shortcomings with such constructions as practice has shown in the past.

A Family Trust is  therefore the preferred legal protective instrument. It has many advantages over a Last Will to achieve Estate and Asset Planning, and to regulate one"s  finances.

Contact us to discuss your family trust requirements.
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