A family trust fund is a legal entity that holds assets and property to pass on to family members or beneficiaries. It provides benefits to the grantor and beneficiaries, including asset protection, tax savings, and bypassing probate. The grantor must choose trustees and draft a legal document outlining their wishes and instructions.
A family trust fund is a legal entity that holds assets and property to pass on to other family members or beneficiaries. Establishing asset protection in the form of a family trust provides benefits to the person establishing the arrangement, known as the grantor, as well as the beneficiaries. The grantor must choose one or more persons to act as trustees to manage the legal entity. Other steps must also be taken before transferring assets and property to the trust fund.
A family trust offers one of many financial options when it comes to estate planning. This type of trust maintains wealth within a family by ensuring that all assets and property pass to loved ones upon the grantor’s death. The grantor controls what goes into the trust fund and who benefits from it. The grantor also works with a trustee who ultimately oversees the assets of the family trust fund upon the grantor’s death.
There are certain advantages to creating a family trust fund for both the grantor and the beneficiaries. For example, the family trust provides a secure financial resource for family members, including minor children. Proper account management helps protect assets and prevents any beneficiary from wasting them. In addition, the person organizing the trust fund can sometimes save on income, gifts, and estate taxes. The availability of a family trust fund also generally allows beneficiaries to bypass probate and arrange for assets to be transferred immediately upon the grantor’s death.
In addition to choosing beneficiaries such as a spouse, children, grandchildren, or other relatives, the grantor of the family trust fund must choose one or more trustees. A relative or close friend with solid financial experience can act as trustee. An impartial third-party source, such as an estate attorney or financial trust corporation, may also manage the trust fund. Multiple trustees may also be appointed in the event one of them dies or is unable to continue managing the assets.
An important step in establishing a family trust fund is to draft a legal document that sets out in writing the person’s wishes, the names of the beneficiaries, the property and assets of the trust, the names of the trustee(s), and any special instructions. to the administrator or group of trustees, such as when and how to disburse funds to certain beneficiaries. The document must be certified and filed with the attorney or trust corporation. Depending on the place of residence, the grantor may also file a copy of the trust document with the recorder of the office of deeds or an equivalent government agency in that jurisdiction. Upon completion of the documentation process, the grantor can transfer the assets to the trust.
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