Protect your wealth/Create a Family Trust
Declare your Property Trusts/Choose your beneficiaries
A Trust is a legal entity that holds assets for the benefit of another. It becomes easy if you think of a trust like a container holding property for somebody else. The assets you choose to put into a Trust depend largely on your goals.
You can create a Trust in your lifetime (when you will be known as the Settlor) or Trusts can be established by your Will. After your death, the assets you have selected pass through your Will and are held within the Trust.
Since Trusts can be used for many purposes, they are a popular estate planning tools. They are often used to:
Minimise estate taxes;
Shield assets from creditors;
Avoid expense and delay in administering your estate after death;
Preserve assets for your children;
Create investments to be managed by professionals;
Set up a fund for your own support in the event of incapacity;
Provide benefits for charity; and
Shield assets from assessment to care fees
Where land or property is held by one person for the benefit of another, a property trust arises.
Property trusts can also arise where more than one person owns a property jointly with another. The legal title is owned by the two owners, but their respective interests in the property may be different because, for instance, they have put different amounts towards its purchase price, or only one of them pays the mortgage. Each owner can choose how their interest in the property is to be dealt with if they separate or if one or both of them die by entering into a Declaration of Trust to expressly provide in what proportions they wish to their interests to be dealt with in such circumstances.
Sometimes a person may own a property solely in their name, but the property purchase has been funded by two or more people. A property trust arises in these circumstances also.
Recent case law has highlighted the difficulty in determining a party’s share in a property where an express Declaration of Trust has not been made. The potential consequences of not making a Declaration of Trust at the time of property acquisition include the possibility of dispute, becoming involved in litigation later on and incurring costs as a result, and the possibility that the court will divide the property in a way that is different from what you intended.
A Declaration of Trust can declare how you intend to hold equal or unequal shares in a property, how the purchase monies have been provided and, in the case of unequal contributions, how this will affect your position on death or separation from your co-owner. If you and your co -owner intend to hold unequal shares in the property, the Declaration of Trust will record the size of the shares that you have agreed to own.
Sorting this out at the time of your property acquisition will prevent costs and disputes arising in the future. You can download, complete and return our property trust questionnaire if you want to instruct us.
Find out more about lifetime and property trusts. Complete our property trust questionnaire. Call us for prices.