Family Trust Law and Legal Resources
How to Establish a Family Trust
Prior to establishing a family trust, you should consult with an Estate planning attorney to obtain critical advice about the tax implications and the legal rights of each family member under a living trust. Since Congress frequently changes the tax regulations that govern a family trust, it is important that you are aware of how these laws may affect you and your family members.
However, in a typical situation, a family trust can be established when a family member gifts property or assets to the trustee for the benefit of one or more family members. Further a qualified Estate planning lawyer can draft an agreement that specifies the responsibilities of the trustee and the power to control and manage the trust. The agreement is the essential element of the trust as it provides the legal foundation of how the trust is to operate and can minimize potential conflicts and disputes among family members.
Nevertheless, family trusts are established to provide legal protection of assets and offer a range of tax advantages, although the establishment of the trust cannot be used to take advantage of the tax benefits alone. Yet, the creation of a family trust can help family members retain valued property within the family group, such as a home or treasured assets.
What Are the Tax Advantages of a Family Trust?
While there are various tax benefits of establishing a family trust, one of the advantages for a family member is the reduction or elimination of estate taxes imposed by the federal government whenever property is inherited due to a death of a family member. Estate taxes are regulated by the federal government and can change from time to time. However, there are certain exemptions in which a beneficiary could be permitted to claim that will reduce or eliminate the tax obligations.
What Are the Other Benefits of A Family Trust?
If you are considering leaving your property to your spouse, child, grandchild or other family members, it is a natural thought to be concerned about the future of your assets during a marriage, or unfortunately a divorce. Many people bequeathed their most valuable possessions such as the family home to their loved one with the anticipation that these belongings will remain within the family group. The family trust should be drafted to protect your beneficiaries’ inheritances from a property distribution dispute in a divorce, creditors, bankruptcies, and certain lawsuits.
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