Importance of Family Fund Trust

There are different kinds of trusts are available when it comes to protecting the asset for your family and the future generations. Among the different kinds of trust the family fund trust is the most preferred one which is set up by a family member to ensure that it benefits the rest of the members of the concerned family. Also commonly known as discretionary trust this trust is a legal structure that not only holds asset but also conducts business in its own right. As already mentioned such trust is set up to protect the asset for the family but some other reason might also include tax purposes and income distribution (to multiple family members).

When a discretionary trust is created it involves a series of important segments that starts with the trustee, the settlor, the appointer, the guardian and lastly the beneficiaries. Let’s learn about these segments in detail. Firstly, the trustee can be either a person or a corporate entity (pty ltd company) responsible for conducting the trust followed by making decision on trust activities that would benefit the beneficiaries like taking decision to purchase or sell the company. The trustee is also responsible for any debts or liabilities of the trust.

The settlor is the person who gifts “settlement fund” to create the trust who has no on-going duties to the trust. Next is the appointer who holds the authority to remove and replace trustee. The guardian holds the power to supervise specific activities of the trustee such as income and capital distribution to the beneficiaries followed by varying the Trust terms. The last segment is the beneficiaries for whom the Trust is created to provide them the benefits. In case of family trust the beneficiary might be specific named parties like the children but might include extended unnamed family.

One of the major benefits of setting up a family Trust is it allows the trustee to distribute the income earned by the Trust as long as the wealth, asset or the money is going to the people who are named as beneficiaries. Bare trust is also another way to ensure that beneficiaries get the property where the trustee merely holds the property on behalf of the concerned beneficiary and transfers them when required.

Whether you set up a Family trust or a simple trust make sure that you have the correct documentation and don’t hesitate to seek the help of online legal documentation service also to get free legal advice if required.