Wealth Preservation
This division of title in a family trust facilitates wealth preservation as it protects assets held in trust from claims against the settlor and the beneficiaries as neither the settlor nor the beneficiaries holds legal title to the assets. In other words, a creditor of the settlor or a beneficiary has no right to seize assets held in trust as the trustee rather than the settlor or the beneficiary owns those assets.
Family trusts designed to protect assets are sometimes known as asset protection trusts.
Family Wealth Succession
Planning
Equally, this division of title in a family trust facilities family wealth succession planning as the trustee can hold legal title until an appropriate time to transfer title to the beneficiaries. The settlor can decide at the outset what that appropriate time might be or what conditions might need to be satisfied before such a transfer or the settlor can give the trustee the discretion to make that decision subject to certain guidelines.
Because of the nature of the trust, the trustee owes a duty to hold the legal title for the benefit of the beneficiaries, ensuring that while the trustee holds legal title to the assets, he must manage those assets in the best interests of the beneficiaries and cannot treat those assets as his own.
Flexibility
A family trust is highly flexible. Free from rigid formal requirements that often apply to corporate vehicles, family trusts can be customized in an infinite variety of ways subject to an infinite number of conditions and contingencies to meet each individual family's specific needs. It can be customized to meet different requirements for estate planning and tax planning. It can be customized to maximize wealth preservation objectives and it can be customized to offer maximum opportunities for wealth generation.
