Can you TRUST your judgment when you’re no longer around?
What is a Trust?
A trust is an alternative way to distribute your estate.
A trust is a legal arrangement between you (the settlor) and a trustee.
When you set up a trust, your appointed trustee takes ownership of your assets and manages them in the best interest of your beneficiaries. You can decide the terms of the trust including who your beneficiaries are, and how much power you wish to retain over your trust.
As assets placed in a trust are not part of a deceased’s estate, probate is not required, and disputes over the assets can be avoided.
2 types of Trust
Setting up a trust during your lifetime – A living trust is set up during a settlor’s lifetime, where the assets are transferred to the trust. Examples are Inter-Vivos, discretionary or revocable trusts. It is done by executing a trust deed together with the transfer of assets to the trustee.
The settlor can revoke or terminate the trust at any time.
Testamentary trust – It is made using a Will and takes effect after the settlor’s death. This is useful where you have:
- Young children
- Dependants with special needs
- Beneficiaries who may inherit a large sum of money but are unable to manage it
Once this trust is in place, it is irrevocable.
Why set up a trust?
You may consider setting up a trust if you want to:
- Control and protect your family assets. You may also want the money held in the trust to be invested.
- Buy a property for your child. Specify the age to have it transferred when your child grows up.
- Provide for a child who is a minor, or has special needs.
- Provide for an adult child who is careless with money.
- Protect your money in the event of a divorce.
- Protect your assets from creditors.
- Preservation of wealth especially for business owners
- Making financial provisions for minor children (Education, Medical, Maintenance) in the event of demise.
- Making provisions for a spouse who is a homemaker in case children do not care.
- As an estate duty planning device.
- As an income tax planning device for high-income earners with income-producing assets. (Refer to IRAS for more details)
- Making provisions for children or loved ones who are disabled, handicapped, or aged.
- Making provisions for charitable causes as a part of legacy planning.
If you have a dependant with special needs, you can approach the Special Needs Trust Company (SNTC) to help you set up a trust for him/her.
Wondering if a Trust arrangement is suitable for your situation, engage a legal adviser or an estate planner to map out your intentions & instructions in your family trust deed.
To find out more, attend our webinar (Grow Assets Even After Death) or have a FREE Estate Planning Risk Assessment to find out how prepared are you for your loved ones if you’ve passed on yesterday.
Important: The information and opinions in this article are for general information purposes only. They should not be relied on as professional financial advice. Readers should seek unbiased financial advice that is customised to their specific financial objectives, situations & needs. This advertisement or publication has not been reviewed by the Monetary Authority of Singapore.
Published By:
Chew Hock Beng 周福明
Hock Beng (福明) is a highly qualified individual in the field of financial planning and consultancy. His impressive array of certifications, including Certified Financial Planner, Chartered Financial Consultant, Chartered Life Underwriter, and Chartered Family Office Specialist, reflects his dedication to mastering various aspects of financial services.
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