Family protection trusts generally provide strong security for the family assets and ensure a healthy inheritance system. It contains lots of advantages for a family. Besides the advantages, family protection trust carries some disadvantages too. Before making the decision to create a family protection trust, one must learn both the pros and cons of having a family protection trust. So, let’s discuss it in detail in the next sections.
Family Protection Trust
Family protection trust is a kind of legal procedure by which you can ensure of carrying out all your wishes according to your intention, in a legal way. It’s almost like probate. You can ensure permanent security and protection for all your assets as well as debts and expenses through the establishment of a family protection trust.
The trust conserves all your cash, assets, investments, debts, expenses, and even your home as well. Once you have made up your own family protection trust, you no longer need to worry about any of your assets. Everything, the family protection trust will nicely maintain just like you intend to do.
Pros and Cons of Family Protection Trust
Making a family protection trust serves you with a number of benefits you can not even imagine. Besides, the trust contains some disadvantages for you as well. So, let’s talk about what pros and cons a family protection trust may contain.
- A family protection trust is almost like probate, as mentioned earlier. If you have a family protection trust for your assets and other things, you no longer need probate separately. So, your family protection trust is saving your time on one hand and extra expenses for probate on the other.
- The trust protects all your inheritance from the hassles of lawsuits. It prevents the chance of disinheritance as well. So, there is no chance for any of your heirs to be disinherited in the future.
- It allows your children and their spouses to be fit in various public benefits, not expending your inheritance.
- It protects the assets for ages and maintains a serial handover, meaning when you will die, the trust will protect your assets, and when your children grow up enough to handle them, the trust will hand your assets over them. The same thing it will do with your grandchildren and perhaps the next generation as well.
- You will get good security in case of divorce from the family protection trust. It will take care of all of your rights and financial supports also.
- It defends your bankruptcy.
- When your child becomes the heir of your inheritance, it turns the inheritance taxation aside in case the child gets died.
- It provides you a secured retirement planning as well as superannuation.
- Creating a family protection trust makes a huge amount of cost. Although it provides you a lot of benefits, you might not be interested in making a family protection trust just for its expenses.
- Sometimes, you might need to create various trust accounts for various purposes separately. For example, in the case of your motor vehicles or cars, you must create a SEF 44 and Family Protection Endorsement Trust, which provides you security in case of any unexpected accidents and injuries. So, thus, family protection trust carries the hassle of maintaining lots of trust accounts together.
- Like all other assets or bank accounts, you have to pay an amount of tax return per year for your family protection trust, which might seem like an extra annual cost to you.
- Your trust account will provide you strong security for your assets only when it makes the use of a trustee who is completely independent. In that case, you might feel that the control of your assets is hampering. Moreover, you also have to pay an additional fee for that trustee.
- Family protection trust works very well only when you and your children will maintain all the rules and regulations of the trust properly. Otherwise, it will not carry out its duties at all.
- In the future, your children will get a very little amount of benefit from the family protection trust if they expend their inherited funds quickly—the less the time, the less the benefit out of it.
So, perhaps, now you have a clear idea about the family protection trust and its pros and cons. The decision is yours now. Analyzing all these advantages and disadvantages of family protection trusts, you can easily decide what is best for you. If you want to make a family protection trust and learn how to make it, you can take help from an expert in this field.