The Difference Between Family Trusts and Wills
If you’re researching wills and family trusts, chances are that you’re looking to make arrangements for the management of your assets. As people start to plan for the distribution of their estate, it’s very common for there to be confusion surrounding these two procedures. Many confuse them for being the same thing, though they actually serve very different purposes. So, which one are you looking for, then? Let’s find out.
This blog outlines the purposes and benefits of wills and family trusts. If you’re looking to set up either, or simply want some more personalized advice surrounding the management of your assets, contact J Mishkin Law today.
What is a Family Trust?
A family trust is a type of discretionary trust – it is set up to hold a family’s assets, under the management and control of the legal trustee. This trustee is in charge of distributing the income and various assets within the trust to other family members and beneficiaries. The trust is set up and managed through a trust deed, which lays out specific roles such as:
- The settlor (the person setting up the trust)
- The trustee (the person managing the distribution of income and assets)
- The appointer (the person who can appoint and remove the trustee)
- The beneficiaries (those receiving income and assets)
All assets will remain in the trust until the trustee distributes them to the beneficiaries at their discretion.
Benefits of a Family Trust
There are a couple of key benefits to creating a family trust. Firstly, there are some great tax benefits, as moving assets into a trust minimizes overall tax liability for your family. Dispersing income across various beneficiaries lessens the amount of tax you’ll need to pay on your overall family income.
Secondly, having a family trust provides new levels of asset protection. Any asset placed within the trust instantly becomes property of the trust, rather than the original owner. If you’re ever at risk of your personal assets being seized, due to lawsuits or bankruptcy, assets within the trust won’t be considered your property and will therefore be protected.
What is a Will?
A will is a legal document that details how your property will be dealt with and distributed upon your death, giving details instructions for the management of all your personal assets. A will becomes operational only after your death, despite being prepared and finalized prior. There will be an executor chosen, and this will be the person in charge of ensuring all instructions laid out in your will are followed and properly enforced. In your will, you will name all your assets and specify direction for each – though residue clauses are often included two, where all assets other than those you name are pooled together for simpler distribution.
Benefits of a Will
The primary reason somebody chooses to plan out their will is to ensure that all their assets are handled exactly to their preferences after they pass. Upon the death of somebody without a will, a far more complicated process needs to take place. In this scenario, only spouses and immediate family can inherit your assets, and the procedure to decide where your belongings go becomes incredibly complex. A will is the only way to guarantee that what happens to your estate after your death meets your wishes.
Contact J Mishkin Law to Find Out What’s Right for You
Family trusts and wills serve very different purposes, and each come with their own unique legal hurdles and essential details. If you’re looking to set up either a trust or a personal will, then it’s important to have a strong legal expert on your side. At J Mishkin Law, we care about protecting your assets and ensuring that every single client we work with find the perfect trust, will, and protection for them. Contact us today to discuss your situation, and we’ll help you decide what the best next step is.