ESTATE ADMINISTRATION PROCESS

Trust In Estate Planning

 The Benefits That Can Be Achieved Through Trust

 You need to analyze how the trust instrument can be implemented in order to achieve your estate planning objectives.

• The way to approach is first to consider which of the following 3 purposes of setting up a Trust you  have in mind, then consider to determine the type of trust that can be utilized to achieve that specific purpose whether for short term or long term basis.

 Protection

Protection from any probability of mismanagement, credit's claims or bankruptcy. Therefore, Trust may be created to provide adequate income to dependants to maintain your standard of living, to provide liquidity for creditors, funeral expenses [protect estate shrinkage], to create Trusts for heirs who lack financial expertise and to create Secret Trust for very special individuals.

 Preservation / Management

The objectives to ensure that the wealth accumulated over a lifetime are preserved and professionally managed and not divided up among the heirs but retained as one fund to increase further or generate income or providing income/ payments to intended Beneficiaries as the need arises while preserving some assets for future generations subject to rule against perpetuity; to preserve family legacy for next generation subject to rule against perpetuity.

 Provision / Distribution

To provide and distribute adequately for all the estate owner's dependants and the Trust instrument can be created and used to achieve that purpose by making special provision for less fortunate heirs with physical or mental handicap, to provide for charity close to your heart, to create research/ charity foundations, for heirs for projects beneficial to mankind and by making special donations to religious organizations.

 How To Tailor Make Trust To Achieve The Settlor's Objectives?

Trust is created by tailor making the trust deed to suit the needs of each settlor and (or) to suit the needs of their beneficiaries. You can analyze what you want using the following checklist as a guide;

  Find out what's the intention of the Settlor

Narrow your intention to the 3 basic purposes of estate planning as mentioned above. Then, determine the time frame to achieve that specified purpose to comply with rule against perpetuities and whether the purpose is to achieve during lifetime or upon death of the Settlor.

For example, if the purpose is to be achieved during the lifetime, you may choose the creation of an inter vivos trust/ living trust and on the other hand, if the purpose is to be achieved upon death, then it may be a testamentary trust.

You must make sure that the purpose is not contrary to public policy, the consequences of which nullify and invalidate the trust created.

    Identify the intended Beneficiary (ies) and the number of Beneficiary (ies) intended for certainty of subject matter.

At this point, you ascertain the Beneficiary (ies), whether it is for the benefit of the private individuals or a class of individuals or the public at large or a specific purpose.

For example, if you, the Settlor's intention is to create an express private Trust and it is for the benefit of an individual or a class of individuals then the type of trust to consider would either be a Fixed Trust or a Discretionary Trust .

Where the purpose is for the benefit of public at large, then the type of trust to consider may include a Charitable Trust or even a purpose Trust if the objective is charitable or has a specific purpose.

       Consider the purpose and the subject matter of the Trust.

Here the issue to consider is whether the purpose of the trust is for protection and/ or preservation and/or provision for the benefit of the intended Beneficiary (ies). e.g. whether the purpose of the trust is for_, protection against a wasteful or extravagant Beneficiary or whether the purpose of the Trust is for preservation purposes where an individual may wish to ensure that wealth accumulated over a lifetime is not divided up amongst the heirs but retained as one fund to increase further, providing payments to the members of the family as the need arises while preserving the assets for future generations.

This web site is best viewed at 1024 x 768 resolution and using Internet Explorer 6.0 or above.