- Date : 18/09/2023
- Read: 3 mins
A look at why private trusts are important and relevant for people and businesses looking for succession planning.
Most business-owning families and high-net-worth individuals have relied on wills to ensure the smooth transitioning of business and estate from one generation to the next. However, never-ending legal disputes over the will are a common phenomenon.
Trusts are a preferred alternative for many such business families. You can simply create a private family trust and use it for efficient succession planning.
- Compared to wills, a private trust is less prone to disputes
- Careful planning and designing of the trust is important to ensure that your trust addresses all your expectations
- Trusts can ring-fence assets and eliminate conflicts within the family
- Choosing the right trustee will help you further in making the trust effective
We take a look at a few reasons why families prefer trusts over wills when it comes to succession planning.
Why you should use a trust?
Here’s how a trust will help you in your business and property transitions.
1. Trusts address wider expectations –
A trust not only ensures a smooth and harmonious inheritance process but can also meet different business goals. The business owner may want the shareholding of the business, its ownership structure and management should be structured in a certain way. She may also want to protect the non-resident inheritors from overseas taxation, and also protecting assets from matrimonial issues. A mere will cannot achieve all of these objectives.
2. Better in empowering –
In the case of an unfortunate event, a trust is well-equipped to handle and protect the finances of the family. A trust can be used to plan and ensure the cash flow needs of the family and maintain their lifestyle in unforeseen situations.
3. Ring-fencing –
When a trust is appropriately structured, it can safeguard the family assets from getting attached to any specific beneficiary. This ring-fencing is particularly helpful in protecting assets from liabilities and marital issues. A trust can ensure that the asset stays within the family and is not exposed to any individual litigation issues.
4. Conflict-free resolutions –
When carefully created, trust can be a tool to avoid unwanted conflicts between family members. A corporate trustee can be chosen for professionally handled accounting, compliance and inheritance execution.
Also Read: Estate Planning For Women: How To Secure Your Assets With Wills, Trusts, And More
A matter of trust
If you are planning to create a trust as a part of your succession planning, you must give time to the structuring of the trust. The trust must consider the applicable laws in the case of family members who are overseas residents. The trust should also include asset-specific plans for different types of assets. The family members should have a unanimous choice for the role of the trustee. A detailed consultation of the family members on all matters helps in a friction-free succession.
Click here for the latest articles on Wise Up
Also Read: Property Inheritance: A Financial Windfall Or Burden?
Disclaimer: This article is intended for general information purposes only and should not be construed as insurance or investment or tax or legal advice. You should separately obtain independent advice when making decisions in these areas.
Most business-owning families and high-net-worth individuals have relied on wills to ensure the smooth transitioning of business and estate from one generation to the next. However, never-ending legal disputes over the will are a common phenomenon.
Trusts are a preferred alternative for many such business families. You can simply create a private family trust and use it for efficient succession planning.
- Compared to wills, a private trust is less prone to disputes
- Careful planning and designing of the trust is important to ensure that your trust addresses all your expectations
- Trusts can ring-fence assets and eliminate conflicts within the family
- Choosing the right trustee will help you further in making the trust effective
We take a look at a few reasons why families prefer trusts over wills when it comes to succession planning.
Why you should use a trust?
Here’s how a trust will help you in your business and property transitions.
1. Trusts address wider expectations –
A trust not only ensures a smooth and harmonious inheritance process but can also meet different business goals. The business owner may want the shareholding of the business, its ownership structure and management should be structured in a certain way. She may also want to protect the non-resident inheritors from overseas taxation, and also protecting assets from matrimonial issues. A mere will cannot achieve all of these objectives.
2. Better in empowering –
In the case of an unfortunate event, a trust is well-equipped to handle and protect the finances of the family. A trust can be used to plan and ensure the cash flow needs of the family and maintain their lifestyle in unforeseen situations.
3. Ring-fencing –
When a trust is appropriately structured, it can safeguard the family assets from getting attached to any specific beneficiary. This ring-fencing is particularly helpful in protecting assets from liabilities and marital issues. A trust can ensure that the asset stays within the family and is not exposed to any individual litigation issues.
4. Conflict-free resolutions –
When carefully created, trust can be a tool to avoid unwanted conflicts between family members. A corporate trustee can be chosen for professionally handled accounting, compliance and inheritance execution.
Also Read: Estate Planning For Women: How To Secure Your Assets With Wills, Trusts, And More
A matter of trust
If you are planning to create a trust as a part of your succession planning, you must give time to the structuring of the trust. The trust must consider the applicable laws in the case of family members who are overseas residents. The trust should also include asset-specific plans for different types of assets. The family members should have a unanimous choice for the role of the trustee. A detailed consultation of the family members on all matters helps in a friction-free succession.
Click here for the latest articles on Wise Up
Also Read: Property Inheritance: A Financial Windfall Or Burden?
Disclaimer: This article is intended for general information purposes only and should not be construed as insurance or investment or tax or legal advice. You should separately obtain independent advice when making decisions in these areas.
