You do not necessarily need a family trust. It is one planning tool that can be useful where a family wants assets to be managed separately from individual ownership and according to rules that can continue across death, incapacity or changes in family circumstances.

Typical reasons include providing for minor or vulnerable beneficiaries, preserving family assets, creating continuity in the management of investments or business interests, and reducing the amount of future growth that accumulates in a founder’s personal estate after assets have been validly transferred. A properly structured and administered trust may also provide a degree of separation between trust property and the personal creditor risks of the founder or beneficiaries.

These benefits come with trade-offs. Transferring assets can trigger tax and transaction costs, loan accounts may remain assets in the founder’s estate, section 7C can affect low-interest funding, and trusts carry ongoing tax, beneficial ownership and governance obligations. Whether a family trust is worthwhile should be assessed against the specific problem it is intended to solve.

See also: Is a family trust a must? | What are the advantages of a living trust? | What are the disadvantages of a family trust?

Disclaimer: The information provided here is intended as general guidance only and does not constitute legal, tax, or financial advice. Every situation is unique, and legislation is subject to change. We invite you to reach out to our team at Wealth and Legacy Group for guidance tailored to your specific circumstances.