How can a trust be used to protect an individual's wealth without actually transferring the assets into the trust?
How can a trust be used to protect an individual's wealth without actually transferring the assets into the trust?
1. Ownership and Control
Client Retains Ownership: When assets are transferred into a revocable living trust, the client (also known as the grantor or settlor) retains ownership and control of those assets during their lifetime. The client can buy, sell, or manage the assets held within the trust just as they would outside of the trust.
2. Preservation of Privacy
Confidentiality of Trust Terms: Unlike probate proceedings, which are matters of public record, the terms of a revocable living trust remain private. The details of asset ownership, beneficiary designations, and distribution instructions are not disclosed to the public, preserving the family's financial privacy.
3. Smooth Succession Planning
Purpose
The revocable living trust allows the client to designate a successor trustee to manage the trust assets and carry out the distribution instructions upon the client's incapacity or passing. This ensures continuity in asset management and provides a clear roadmap for the orderly transfer of wealth to heirs.
Asset Protection for Beneficiaries
By structuring the trust with appropriate provisions, such as spendthrift clauses, the trust can provide ongoing asset protection for beneficiaries, safeguarding their inheritance from (creditors, divorces), or poor financial management.
Key Considerations
Proper Funding of the Trust
To fully realize the benefits of a revocable living trust, it's essential to fund the trust by transferring ownership of assets into the trust during the client's lifetime. Assets not properly titled in the trust may still be subject to probate.
Estate Tax Planning
While revocable living trusts do not provide estate tax savings during the client's lifetime, they can be integrated into a comprehensive estate plan that incorporates tax-efficient strategies to minimize estate taxes upon the client's passing.
By utilizing a revocable living trust for asset protection and efficient wealth transfer, clients can maintain control over their assets during their lifetime, (streamline the distribution process for heirs), and preserve privacy in their estate affairs.
Asset Protection Trusts (APTs) for Future Protection
Purpose
Clients can establish irrevocable asset protection trusts (APTs) with themselves as beneficiaries during their lifetime.
Asset Preservation
While the client retains the ability to benefit from the assets within the trust (such as receiving income or use of trust property), the assets are shielded from potential creditors and legal claims. This protection becomes more robust over time, especially once the assets are held exclusively for the benefit of future generations or designated beneficiaries.
Dynasty Trusts for Multi-Generational Wealth
Purpose
Setting up dynasty trusts allows clients to transfer significant wealth to future generations while minimizing estate taxes and preserving assets for multiple generations.
Wealth Preservation
Assets within a dynasty trust are shielded from estate taxes and creditors, providing long-term financial security for the client's descendants. The trust can include provisions that limit access to trust funds, ensuring responsible wealth management over time.
Trust & Maxinvestpay
Combining a Trust with our Canada-licensed institution maxinvestpay.com forms a very strong structure where certain activities would be covered by the licensed institution and others by the Trust Company (holding assets), with both structures complementing each other and thereby widening the range of different activities
This website uses cookies.
We use cookies to improve the user-friendliness of our website. By continuing to use our website, you agree to the use of cookies in accordance with our cookie policy. Cookie policy
Absolutely required
Performance
Targeting
Functionality