Wealth Protection. Trusts And The Utilization Of Them To Create Wealth
Trusts are essentially a mechanism people use to increase the efficient management of property and decrease the costs of ownership. If and when you decide to set up a trust you are going to need a reliable and trustworthy lawyer. This person will be acting in the capacity of a fund manager and will be responsible for delegation of the funds as per the mandates of the trust agreement. Preferably you are going to select one who has an extremely good reputation.
He / she is going to be one who has at least 20 or more years experience in the field. This lawyer is also going to be someone whom you can talk easily with, someone who is understanding and flexible, but also someone who will not compromise the objectives of having the trust. These objectives should be stated very clearly at the out set and should include a definite major reason.
Here is a list of examples of such reasons for forming a trust in the first place. It will also give you an idea of the different types of trusts you can set up.
Privacy. The terms of a will are publicly available whereas the terms of a trust are held in strictest privacy
Dissolution of wealth protection. This is commonly known as spendthrift protection and occurs where, for example, a father may have a million dollars in the bank and want to leave it to his only daughter. He may also recognize that she does not know how to handle money. Therefore he places the wealth in a trust fund, with the instructions that she is not to be given access to it but is to get a weekly, or monthly allowance based on th nett profit of the trust divided by the frequency stipulated.
This type of trust can also be used for protection in the situation where persons outside the family become aware of the wealth and marry into the family with intention of getting their hands on the family fortune. Not only that, but, if one recognizes the inability to sensibly invest large amounts of money in ones self then one can set up a trust to do the same here for ones self as anyone else.
The gifting of wealth to charities. Oftentimes a person is left with no surviving relatives with which they have any sense of connection for. In this circumstance the person may have been assisted over their life time by a particular chartable organization, such as the Blind foundation, the RSPCA or other. In this instance the person can set up a trust with all profits (less admin costs) to go to their favorite charity
Retirement trusts. Almost self explanatory, this type of trust is set up to provide for you when you get too old, or infirm, to be employable, or can no longer generate your own cost of living.
Remuneration trusts. These are trusts set up to provide ongoing funds in recognition of services performed, the distribution of the funds extending to a persons family members. Normally this type of trust is for the benefit of a company director, employees or families / dependents.
Asset Protection. This type of trust does exactly what the title says. In the event of a divorce, or other dissolution of relationship (death, bankruptcy)) the assets (usually property, cash investments) are protected by the mandates of the trust. Future creditors are unable to gain access to any wealth the person may hold, because, in effect, it is not the person who has the wealth. The wealth is held in trust, never to be dispersed, for any reason.
I hope this has given you a bit of insight into why and how trusts can be used to create and protect wealth. For me, personally, trusts leave an open door to providing protection and safety in what is often a dog eat dog world.
Personally I would prefer to run with creating business systems which cost little and produce heaps. Then maybe I will have enough to warrant setting up a trust fund of my own
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Keith Roberts has been working in the field of wealth creation for nearly ten years and has written 7 books
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