What Is Trust?

A Trust is an estate planning instrument for an Individual to ensure the total protection of asset(s) is preserved for the beneficiaries while in the safe hands of the Trustee.

There are three parties involved in a Trust.

1. The Settlor - person who sets up the Trust.

2. The Trustee - the person or a corporation who manage the Trust assets.

3. The Beneficiary - the person who receives benefits from the Trust.

Help Me To Setup A Trust

How Does a Trust Works

The Trustee receives the assets from the Settlor and is legally obligated to hold and manage the assets for the enjoyment of the beneficiaries during the trust period set by the Settlor. It is commonly known as "Living Trust"

Who is the Protector of a TRUST?

A person appointed by the settlor with the following job scope:

1. Act as a watchdog for the settlor when he passed on

2. Advise the trustee on the needs of beneficiaries

3. Recommend payment to beneficiaries using Letter of Wishes

4. Has the power to remove and replace the Trustee.

What Assets Can Be In The Trust?
The assets commonly used to set up a trust are: cash, insurance policies, unit trust, properties, shares.

The property under Trust do not belong to the Trustee personally. Though the trust property is registered in the Trustee's name, it is NEVER part of the Trustee's own properties when he dies. Only the Trust beneficiaries will be entitled to the Trust Fund NOT the Trustee's own beneficiaries.

Example of Common Usages of Trust

1) Distributing Wealth to Avoid Probate

Trust of this nature is useful when you have:

1. Minor children and spouse who is a homemaker or earning not as much as you

2. Special children requiring funds for medical, education and living expenses

3. Have a 2nd Family to provide for

4. Financing children's tertiary education.

2) Protecting Wealth

Protecting Against Wasteful Beneficiaries

The Protector appointed will ensure there is no wastage of moneys receive under the Trust. Protector can stop disbursement of fund to undeserved beneficiaries.

Against Creditors of Settlor and Beneficiaries

Protector will instructs Trustee to stop the disbursement of fund whenany beneficiary has become a bankrupt.

Protecting Wealth Against the Settlor's Creditors

When a person becomes a bankrupt, usually an investigation by the authorities is done to recover assets transferred up to 5 years prior to bankruptcy. The suspicious transfers will be nullified to recover the assets to pay the creditors.

3) Protecting Wealth Against the Beneficiaries' Creditors!

This is achieved by creating a Discretionary Trust when any of the beneficiary becomes bankrupt, he will no longer be entitled to the benefit under the Trust.

4) Preserving Wealth for Your Great Grandchildren

Preserving assets for your great grandchildren.

5) To cater funds for various family situations

For example, education and Maintenance fund for grandchildren, nephews etc

Why do people setup trust? because

* Assets held under Trust are not frozen upon demise.
* For the distribution of wealth, including periodical payment.
* To ensures the wealth is protected against lawsuits as well as creditors.
* The preservation of wealth.
* Fulfilling various personal objectives, including such as maintenance of dependents and education funds.

Benefit of a living trust

1) Distributes the way you want it to

For example, set goals to be achieved (such as a college degree) before your loved ones receive anything from the trust or to be used for their medical expenses. This avoids wastage of the trust fund.

2) You decide who is to receive

Just like a Will, its your choice, no one can challenge it.

3) No fuss and instantly available as it is not part of the estate

No lengthy legal procedure to adhere. Trust Fund is readily available for the beneficiaries' use because it is in the Trustee's name. It complements the Will you wrote.

4) Have a peace of mind

Once the trust is created and the Protector appointed, the well-being of your beneficiaries are taken care of.

5) Get assets protected from creditors - Irrevocable Trust

When assets have been in the trust for more than 5 years.

6) Not easily contested

Disgruntled family members who are not receiving anything from the trust are unable to make claims against the trust because the assets are no longer under your name.

7) Your instructions on distribution in the Trust Deed can prevent your wealth from being squandered

A comparison between a Will and a Trust

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