Financial and property matters can be a cause of stress when planning a will. A trust acts as a mechanism to bequeath your possessions how you want. An executor holds or distributes your money or estate according to your wishes.
A trust is a form of division of assets between one of more beneficiaries and a settlor. The settlor is the person who creates the trust. The assets are transferred to the beneficiary.
Why do I need a trust?
Trusts are an important way of ensuring your assets are distributed per your wishes on your passing. Trusts can be set up in order to provide for children or charitable causes, preservation of assets or tax planning.
What types of trusts are there?
What type of trust you choose is dependent on the needs and circumstances of the beneficiary. There are five trust structures to choose from, explains the Queensland government.
- Child trusts: Provide monetary support for a child, usually stipulated in a will. The money is held by a trustee until the child is 18 or older and can be used to manage expenses such as living costs and education. The money can also be gifted to them at an age specified in the will.
- Trusts for incapable beneficiaries: Manage assets for a person who does not have the capacity to manage their own financial affairs. The long-term goal is investment security for the beneficiary.
- Life estates: Provide an income stream and accommodation for the chosen beneficiary. This can be used to ensure ownership of assets is transferred to children when you pass rather than to a second spouse.
- Discretionary trusts: Enable the trustee to divide income amongst family group in a discretionary manner.
- Charitable trusts: Provide long term benefit to charity, as instead of bequeathing a lump sum you can provide income from your estate.
A trusts lawyer can talk you through the benefits of a trust and how to set one up.