Family Trusts

A family trust fund is a specific type of trust that is established to benefit family members, usually across multiple generations. The main goals of setting up a family trust are to protect inherited assets, provide financial security for beneficiaries, and potentially minimise estate taxes. 

In a family trust, a grantor transfers assets such as cash, stocks, real estate, or other property to the trust. This establishes the initial principal of the trust. The grantor then appoints themselves or another individual as trustee to manage the trust assets on behalf of the beneficiaries. Beneficiaries are the family members who will receive financial benefits from the trust, such as income distributions or gifts of principal. 

There are a few key parties involved in a family trust. The grantor transfers assets to establish the trust. The trustee has control over trust assets and is responsible for managing investments, filing taxes, distributing funds, and record keeping. Beneficiaries receive financial benefits from the trust according to the terms outlined in the trust document. The trust document itself spells out all the rules and conditions, such as how assets can be used, how long the trust will last, obligations of the trustee, succession plans, and more.

One of the primary purposes of a family trust is asset protection. Assets in the trust are separate and distinct from a grantor or beneficiary's personal property. This shields the assets from things like creditors, ex-spouses making claims in a divorce, or unexpected personal expenses. Protected assets pass to heirs according to the predetermined trust instructions rather than probate court rules. 

A family trust also provides financial security for beneficiaries. The terms can ensure a steady income stream or access to funds for education, health costs, or other needs. multi-generational trusts can protect inheritances so that assets benefit grandchildren and beyond, not just children. Carefully administered by the trustee, trust assets have potential to grow wealth over decades for future generations.

Tax benefits are another advantage. Lifetime gifts to the trust may qualify for the annual gift tax exclusion and help reduce the size of an estate over time. At the death of the grantor, assets in the trust avoid the lengthy and expensive probate process. With a properly structured trust, assets may also receive favorable capital gains tax treatment and potentially minimise inheritance and estate taxes that would otherwise be owed.

Overall, a family trust is a powerful estate planning tool that can shelter assets, pave the way for multi-generational financial security, and potentially lower tax burdens for heirs. The tradeoff is loss of some direct control for the grantor and complex ongoing administration. With the guidance of an experienced estate attorney, a family trust has potential to greatly benefit a family for generations to come. Proper documentation and regular maintenance ensures the trust will function as originally intended far into the future.