Family trusts are a popular way to protect and manage your assets, such as the family home, for you and your family, now and in the future. They can have a valuable role to play, but they’re not suitable for everyone. Here are the pros and cons of family trusts to help you decide if it’s worth investigating further.
Five good reasons to form a family trust
- Protect your assets against claims and creditors in the event of business failure or a lawsuit.
- Set aside money for special reasons, such as a child or grandchild’s education.
- Ensure your children, not their partners, keep their inheritances.
- Protect your children from squandering assets or falling prey to financial scams before they’ve gained sufficient life experience to make sound decisions.
- They have a life of up to 80 years (or 125 years under the new bill) unless it’s wound up and distributed earlier.
Three disadvantages of setting up a family trust
- Transferring your personal assets to a trust means you lose complete ownership and it will be the trustees’ responsibility to control them.
- The time and cost involved in setting up a trust and meeting its annual accounting and administrative requirements.
- Disgruntled beneficiaries have the power to sue trustees where trustees have acted in breach of trust. While it’s not common, it is happening more often.
Get professional advice from the start. We can answer any questions you have about trusts, being a trustee, administering a trust deed, and the proposed new Act. Contact us today to book an appointment to meet with us.