A Trust is a legal arrangement whereby assets are held in the trust, and administered by ‘trustees’ for the benefit of ‘beneficiaries’. Trusts are not legal entities, legal ownership of assets are held in the names of the trustees.
Common uses and benefits of using a Trust:
- Safeguarding property for minors, spouses or sick/handicapped dependants
- Protecting assets against claims from creditors, relationship breakdowns or from other family members
- Offering the ability to withhold assets from irresponsible children or grandchildren until they are older and more mature
The Property Relationships Act 1976 has extended the property rights of married couples, to de facto couples, thereby expanding the pool of possible claimants. The potential risk is where a de facto relationship breaks up, your partner can claim 50% of relationship property, or if your child inherits, this can become relationship property in their relationship and thus subject to claims by their partner in the event of a marriage/partnership break up.
Trusts can be a useful asset and Estate Planning tool in this situation.
It should be noted that Trusts are not suitable for everyone. It is best to speak to a specialist for advice suited to your particular needs.