Wednesday, September 16, 2009

Advantages of forming a Trust. Why do people form Trust ?

Setting up a trust as you would be aware via your bollywood movies is mostly for the purpose of protecting assests of a minor to  he turns adult. Trust is an entity created to hold assets for the benefit of certain persons or entities with a trustee managing the trust.
Terms and there meaning
  • The person who reposes or declares the confidence is called the "author of the trust".
  • The person who accepts the confidence is called the trustee.
  • The person for whose benefit the confidence is accepted is called the "beneficiary".
  • The subject matter of the trust is called "Trust-property" or "Trust-money".

Advantages of a Trust
  • Property transferred to the trust during the lifetime will pass directly to the beneficiaries of the trust. The trust property does not have to go through a probate. (Terms of the trust remains private however in case of will if there is a probate or legal case then the document becomes a public document)
  •  Trust is good way to take care for the assets of minor children or elderly people or incapacitated dependents.
  • Saving on taxes: The growth on assets , such as shares transferred to a trust now belongs to trust and it does not combine in your income.
  • the author loose a legal control of the assets and hence in case of insolvency creditors cannot claim money held in trust. however you can have some control by being a trustee of the trust.

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