To manage assets or the estate on behalf of an individual or individuals who are unable to mange their own finances. This could be because they are children, find such financial matters to scary or overwhelming or perhaps they don’t have the mental ability to manage their finances. A good example is when parents die leaving children under 18 years of age. Their assets such as the family home, savings, investments etc are all placed into a trust and managed on their behalf until the children reach 18 years of age.
So what exactly is a trust?
Well a trust is a legal document between a trustee and a beneficiary.
The trustee is given the duty of holding items such as property or investments for the benefit of the beneficiary.
There are many different reasons as to why a trust is established which include:
To help protect assets and estate (as much as possible) against situations such as bankruptcy, divorce etc
Preservation of assets by allowing beneficiaries to receive an income from them but not to have access to the capital. For example, if commercial property is held in trust, it can be agreed that the beneficiary will receive an income from this (the monthly rent etc) but can not actually touch the capitol itself (sell the properties). This way, the assets can be preserved for many future generations.
How to set up a trust
To set up a trust is relatively simple but you will need to seek the services of an independent financial advisor.
They legally must work with you ‘in good faith’ which means to offer fully independent advice and to work for your best interests only and to not financially benefit themselves (please note that they may charge a fee or commission for any services undertaken but when we say they cannot financially benefit themselves, what we mean is that they cannot recommend products simply on the basis that it will make them the most money yet may not be the most beneficial solution to the client).