In addition to ensuring that beneficiaries receive their rightful share of the estate, a trust can also help prevent dishonest actions. Trustees with sound judgment and fiscal awareness are best. Multiple trustees may be appointed to ensure that their interests are well-represented. Trustees should also be equipped with a built-in mechanism to resolve a tie. Some trustees may have extra voting rights. Insufficient trust documentation can be a cause of dissatisfaction among beneficiaries.
A trust is an entity that is created by a grantor and controlled by a trustee. It can hold a variety of assets, and it can avoid the hassle of probate upon the death of the grantor. Probate can take months to complete, and in some cases, can even result in a lawsuit. In either case, a trust can help minimize this hassle and make the transfer of assets easier. Listed below are the most common types of trusts.
Discretionary trusts, on the other hand, allow trustees to choose the beneficiaries. Beneficiaries of discretionary trusts can be children, future grandchildren, or a charitable purpose. Generally, a settlor should specify a clear class of beneficiaries when setting up a trust. Moreover, the trustees can choose whether to make the beneficiaries pay taxes on long-term capital gains. While these two types of trusts can have different purposes, they all require that beneficiaries identify and ascertain the right beneficiaries.
Discretionary trusts are often used for complex business arrangements. The resulting tax savings are substantial for beneficiaries. Moreover, trusts are far more distant from bankruptcy, so the settlor may be a settlor and protector, rather than a trustee. A discretionary trust may also contain a clause that allows the settlor to retain anonymity, or the beneficiaries may not even know that the person whose name is on the trust.
While trusts are geared toward the wealthy, they can be beneficial to people of all economic backgrounds. Trusts can help minimize unnecessary hassles for loved ones and leave a legacy of charitable giving. Some individuals use a trust in addition to a will, and this can lead to a faster and more cost-effective settlement of the estate. In addition, trusts can help individuals with disabilities, including the care of disabled family members. The benefits of setting up a trust are vast, but may require professional help to implement.
In addition to managing the trust’s assets and property, trustees have fiduciary duties to beneficiaries. The primary duties of trustees include loyalty, impartiality, and prudence in their decisions. Depending on the jurisdiction, trustees may be held accountable to higher standards of care, and some breaches of fiduciary duty are criminal offenses. If a trustee is accused of breaching these duties, they may be removed from the trust.
Regardless of the reason, a trust should be carefully designed to provide for your beneficiaries. Your trustee, whether individual or corporate, is the person who manages the distribution of the trust’s assets. Your trustee should be a reputable individual with experience, expertise, and an open line of communication. In the event that you cannot find a suitable individual or business to act as trustee, you can hire a corporate trustee. It will also help protect your family relationships and ensure continuity in the management of the trust.