What is a Trust & Why use it in Real Estate?

A trust is a powerful tool that serves multiple purposes and could benefit anyone interested in protecting their finances and future.This fund can help you manage your property and assets, make sure they are distributed after your death according to your wishes, and save your family money, time and paperwork.

While trusts may seem only for the wealthy, there are actually many benefits to creating them, even if you're not a multimillionaire!

What is a Trust and How does it work

A trust is a structure where a trustee can carry out in the business. This fund is a legal entity, like a group, or organisation. It holds assets, such as cash or property, that are intended to provide benefit to an individual, group or organisation. Generally speaking, all trust funds have three important parties:

Types of Trustees

There are three different types of trustees that you can choose from:

Grantor:

A person who set up the trust and puts the money, stock, private business or other property such as real estate, mutual funds into the trust and who decides the terms upon which it must be managed.

Trustee:

A trustee can be an individual or an organisation, such as a bank trust or a law firm.
The trustee is responsible for managing the trust assets to the trustee while others require the trustee to select qualified investment advisors to handle the money.

Beneficiary:

A person who in group or organisation that is intended to benefit from the asset in a trust.
They do not own the trust property, but have the right to receive the benefit of the property as the trust allows.

Why do people use a Trust?

A Trust can be set up for a variety of reasons, but often it’s initiated by grandparents or parents for their grandchildren or children and set up a bypass trust to help plan for the future of their estate after they pass away.
The same goes for all kinds of trusts, which, if structured properly under the guidance of an attorney, can come with tax advantages like maximizing estate tax bypasses.

5 Advantages of Trust

There are several advantages to creating a Trust, including:

・Protecting your personal and business assets
・Trusts remain private, so only the trustees and the beneficiaries know your wishes.
・Providing for distribution over a period.
・Cover property that a will cannot, such as life insurance policies and retirement plans.
・To ensure your property is distributed under the conditions you set.

4 Types of trust funds

Australia recognises a number of trusts, which generally fall into one of the following categories:

Family trusts

It is simple to operate and accepted in every Australian state. A Family Trust is relatively easy to set up to manage, protect, and pass on family assets including shares, personal property, and the family’s business from one generation to another.

Living trusts

A living trust is a written legal document by the grantor during your lifetime.Also there are two type of trusts, the basic types are revocable and irrevocable trusts.This asset is most appropriate for individuals who have complicated financial or personal circumstances.The living trusts are available from estate planning attorneys, online resources and off-the-shelf software.

Unit trusts

A unit trust is a specific type of trust that divides the beneficial ownership of the trust property into units.
It differs from a family trust in that that generally, the trustee does not have discretion over the distribution of capital or income to beneficiaries.
Distributions must be allocated in accordance to units held in trust.

Hybrid trusts

A Hybrid trust take the best features of a discretionary trust and the best features of a unit trust and blend them in the one entity to create a flexible structure.

Trust are powerful tools for you

Trusts have become a common way of structuring financial affairs, and a logical, tax-efficient means to distribute earnings that protect wealth for future generations. You should certainly consult financial and legal professionals before making any decisions.

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The information in this article is general in nature. Any advice it contains is general advice only and has been prepared without taking into account the objectives, financial situation or needs of any particular person.
The article content is not intended to be a substitute for professional advice and readers are urged to seek their own appropriate advice before making decisions.
Any reference to a particular investment is not a recommendation to buy, sell or hold the investment.

Nov 21. 2018 CrowdfundUP