Home What is a Family Trust? Reasons for Family Trusts How a Trust works and other FAQs Trust Set Up and Personal Wishes Price List Welcome Book and the Next Step Who are we? Contact Us Our Newsletter Order Now
Sign up to our newsletter


The protective trust - Using an Independent Trustee to protect Assets



Trusts are the backbone of effective asset protection. They are legal arrangements for Assets, whereby those Assets are then managed and cared for by Trustees (sometimes with an Independent Trustees).

The Trustees will manage those assets to provide benefits to the Settlors of a Trust and their families. It is becoming more popular for asset owners who set up a Trust, to also act as the Trustees to control and protect the trust assets. Settlors may at present also act without an Independent Trustee, provided that they run the trust as prudent Trustees.

Many Settlors of Family Trusts do not realize the enormous role that a Trust can play in distributing income to them or to other chosen Beneficiaries:                                                           - at a stage in their lives when they cannot run their own investments due to bankruptcy, imprisonment, political duties, commercial sensitivities, environmental concerns, religious duties, poor education or incapacity, but also due to professional risks or otherwise;                                                                     - at a stage in a relationship or political involvement when asset-ownership can be a hindrance or cause for conflict;                                                                          -at a later stage in their lives when they become incapacitated or confused due to old age.

At such times or events, Trusts can provide a protective Armour against asset loss. Then an independent trustee may provide essential  assistance. Independent Trustees are therefore often chosen at a defined or later stage in the lives of the Settlors , to provide the backstop protection, which is sought by Settlors or Appointors at that time.

When a Trust is being formed we ask the Settlors to think about such matters and to indicate to us whom they believe would be suitable to act in that capacity.

This can apply at different stages in  a Settlor's life:

- As a single unmarried person it is wise to indicate which friend or family  member could act in your Last Will, and as Trustee in your Trust. This can happen when you become incapacitated or when you pass away. That is why an Enduring power of Attorney and a Final Direction which  contains all kinds of Personal Information, are standard documents which are prepared with every Trust at Sanctuary TrustLaw.

- As a family with young children it is wise to indicate  who could act as a Guardian for your children on your death or incapacity. That person could possibly also act as a Trustee in your Trust. The above mentioned documents also apply.

- As an Older Adult  it is wise to indicate which child, friend or associate could act for you in times of incapacity, confusion or death. Children are an obvious choice, but may need the support of an outsider Trustee to provide some support and control. The above mentioned documents also apply.

 

 

 

 

Independent Trustees can play an important role in running Trusts to provide effective support when Creditors or others claim that the Trust is a sham or that the Trust Assets are still owned by the Settlor of the trust.

Creditors may wish to pursue their claims against the Settlor-Trustees (those Trustees who have set up the Trust). An Independent Trustee can resist such claims. Choosing an Independent Trustee can make sense in all those cases where there is some exposure to financial risk!

An Independent Trustee has a duty to look after the interests of, not only the Settlors, but also their children and any other Beneficiaries named in the Beneficiary List of the Deed of Trust. It may therefore be effective to appoint such an Independent Trustee, in situations, where Settlors believe that there may be some claim in the future. It also makes sense to do so, when they believe they are running possible risks that they wish to safeguard against. When independent Trustees adhere to their duties they will resist such claims and act in the interest and for the benefit of all the Beneficiaries of the Trust.

They are therefore in a  unique position to ignore the claims of creditors or other claimants, and to give true protection to the Assets in the Trust for the benefit of the Beneficiaries.



Contact us to discuss your family trust requirements.
Click here >