Twenty years ago the establishment of a family Trust was as popular as joining a crossfit gym is today. Unlike joining a gym, the establishment of a family Trust required little physical exertion and was relatively painless in the hands of a good lawyer.
Regrettably, not everyone put their faith in the right hands and as a result some Trusts were poorly set up and didn’t offer the level of protection they should to the parties concerned. Unfortunately, over the last several years this has given Trusts a bad reputation and their popularity has decreased unnecessarily. A well written Trust deed that properly sets out a Trust’s intentions in a legal and practical way is certainly still a worthwhile investment for some people and their situation.
Trusts are an effective way to protect an individual’s separate property from relationship property. In recent years, the judicial system has sort to exercise a sense of ‘fairness’ with regards to assets in a Trust which has given rise to a lack of faith in their establishment. On closer inspection, this judicial need for fairness has been when Trust’s have been established well into the relationship to protect only one of the individuals concerned. When starting a new relationship (or prior to a relationship), it is essential to put a Trust in place as soon as practical to safe guard everyone’s individual assets.
Trusts continue to be very worthwhile for succession planning. It is now far more common for a widower to remarry putting intergenerational assets at risk if the new marriage fails and each party has their own children. If these assets are transferred to a Trust on the death of the spouse, this enables those family assets to be protected for future generations and not part of any future relationships property.
Like all worthwhile ventures, Trusts need to be maintained. As time flies by, our circumstances change often without us noticing! With these changes, the legal and practical reason for having the Trust may also need to be adjusted or redefined. Making sure your Trust aligns with your desires today and what you intend for the future is just as important as the original document.
The team at DK Legal have extensive experience in reviewing Trust documentation and providing advice on the same, including whether a Trust is necessary for your situation.
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