What is the purpose of setting up a trust?

What is the purpose of setting up a trust?

Trusts are established to provide legal protection for the trustor’s assets, to make sure those assets are distributed according to the wishes of the trustor, and to save time, reduce paperwork and, in some cases, avoid or reduce inheritance or estate taxes.

What is the purpose of a spendthrift trust?

A spendthrift trust protects trust property from an irresponsible beneficiary and his or her creditors. A spendthrift trust is a type of property control trust that limits the beneficiary’s access to trust principal.

Can creditors reach spendthrift trust?

Once an asset of a spendthrift trust is distributed to the beneficiary, however, it can be reached by creditors. A spendthrift trust has historically been a powerful tool to protect beneficiaries from their own imprudent business decisions.

How is money set up in a discretionary trust?

Discretionary trusts are set up to allow the person or people managing the trust to choose: who can benefit from the trust; and how much money beneficiaries will receive. This means that the amount of money beneficiaries receive under a discretionary trust is not fixed. The trustee chooses the amount from year to year.

Can a trust be used as a trading trust?

A trading trust is usually a discretionary trust whose trustee is a company, that is used to trade for the benefit of the beneficiaries. As with a non-trading trust, a trading trust separates legal ownership of assets from beneficial ownership and control.

How are discretionary trusts different from fixed trusts?

Discretionary trusts – Here, the trust deed gives the trustees a discretion about matters such as who may be a beneficiary and what each beneficiary’s share will be. Discretionary trusts are more common than fixed trusts; nowadays, most family trusts are discretionary.

How does a discretionary trust work at lawpath?

At LawPath, you have access to a customisable and ready to use Discretionary Trust Deed. In a discretionary trust (sometimes called a ‘family trust’), the trustee has the power to determine which beneficiaries receive the property or assets from the trust and how much each is to receive.

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