Aside from wills, trusts are also one of the estate planning tools used to organize, transfer and protect your assets.
A trust is a legally binding arrangement in which a trustee is assigned to hold and manage assets for the benefit of beneficiaries. With this responsibility, the trustee holds legal title to trust property and assets — handling them according to the terms of the trust, which can include investing, distributing, and paying taxes on income and capital.
Here are 3 common reasons for setting up a trust:
Provide for Young or Vulnerable Beneficiaries
If you have loved ones that are young or have special needs, they might lack the capability to handle their inheritance and are vulnerable to exploitation. A trust lets you create arrangements to protect their interest.
Wealth Management, Protection and Distribution
A trust can be used to protect your assets from creditors and divorce, regenerate more assets through investments and pass them down to your future generations according to your terms.
Tax Planning
Trusts may help with the reduction of your tax liability. For example, the income/profits generated can be channeled to a beneficiary from a lower income tax bracket so that the amount taxed is assessed at the beneficiary’s income tax rate.
Do You Need a Lawyer To Set Up a Trust?
While you do not necessarily need a lawyer to do so, the process to setting up a trust in Singapore can be challenging for a person with no prior knowledge in this field thus it is recommended to engage the help of a professional estate planning lawyer to set up a legally viable trust.
If you are looking to set up a trust and the recommended accompanying letter of wishes or have considerations similar to the ones above, feel free to reach out to us to better understand if a trust is a legal arrangement that will benefit you and the ones you care for.
