What is a family trust? What are the advantages and disadvantages

1. Family Trust**:

A family trust is a type of trust institution. Entrusted by individuals or families to manage and dispose of family property on behalf of the family, the property management method to achieve the wealth planning and inheritance goals of the wealthy.

It first appeared in the United States after the 25-year economic boom (1982 to 2007, known as America's second Gilded Age).

3. Features: 1. Family trust, the ownership of assets is separated from the right to income, and once the rich entrust their assets to the trust company.

care, the ownership of the asset will no longer belong to him, but the corresponding income will still be collected and distributed according to his wishes;

2. If the rich divorce divides the family property, dies unexpectedly or is collected for debts, the money will exist independently and will not be affected. Family trusts are better able to help high-net-worth individuals.

Planning "wealth inheritance" has also gradually been recognized by China's wealthy people.

Fourth, advantages and disadvantages:

1. Advantages: the property exists independently and is not affected by the debts of the property owner; Earnings can be collected and distributed according to one's own wishes.

2. Disadvantages: Once the asset is entrusted to take care of it, its ownership no longer belongs to me; As a new investment method, family trusts** are still deficient in their regulatory aspects.

Benefits and advantages of family trust: 1. It can realize the bankruptcy risk isolation mechanism and have a reasonable risk avoidance function;

2. More flexibility in formulating and changing beneficiaries (testamentary heirs);

3. The distribution of trust benefits can be in different forms;

4. Certain conditions can also be set when distributing benefits.

Extended Materials. Family trust is a property management method in which a trust institution is entrusted by an individual or family to manage and dispose of family property on behalf of an individual.

The realization of the wealth planning and inheritance goals of the wealthy first appeared in the United States after the 25-year economic boom (1982 to 2007, known as the second gilded age of the United States).

Trust is a financial management method and a financial system, which is based on the trustor to entrust his property rights to the trustee.

The trustee shall be managed and disposed of by the trustee in his own name for the benefit of the beneficiaries or for specific purposes according to the wishes of the settlor.

Dividing the act. If the trust business is classified by trust property, it can be divided into money trust, movable property trust, real estate trust, valuable ** trust and monetary creditor's trust. Monetary creditor's rights trust refers to the trust business in which various monetary claims are used as trust property.

A chattel trust is a trust that is set up with various movable assets as trust property.

1. The main elements in a family trust:

Settlor: The initiator of the trust, who is also the actual owner of the original property.

Trustee (turstee): A custodian who holds the property in name and administers the property according to the deed signed between the trustee and the settlor.

Beneficiaries: The beneficiaries who ultimately enjoy the assets according to the contract signed between the trustee and the settlor, usually relatives of the settlor.

2. Benefits of setting up a trust:

Reasonable distribution of assets according to the wishes of the settlor. In many cases, the settlor (e.g., the founder of a wealthy family business) pays a direct account to the beneficiary (e.g

The founder's children and their descendants) have specific requirements for the inheritance and use of his property, and it is most appropriate to administer the estate through a trust agreement. For example, a wealthy businessman has created a family trust with a large amount of money**, but in order to prevent his children and their descendants from abusing his wealth or not wanting to make progress, he can stipulate in the trust agreement: "The children and their descendants can receive an annual trust inheritance of 500,000 yuan per year only after they have obtained a university degree and have reached the age of 24".

In fact, a wealthy merchant may distribute his property in any way he pleases, provided that it is not contrary to the law.

Protect the assets of the family trust. Since the settlor usually places the trust assets in specific territories (e.g. Liechtenstein), and these specific territories usually have a good legal system and the principle of confidentiality of client information, the risk of confiscation or compulsory expropriation of family assets in the local country can be avoided.

Get inheritance tax benefits. Depending on the income tax laws of specific countries and regions, a well-designed family trust can reduce certain inheritance tax or income tax and preserve family wealth to the greatest extent.

1. Inherit family wealth. The settlor can decide the duration and conditions of the trust independently, and can also decide and change the choice of beneficiaries. Trust assets can be cash, equity in a company, or financial assets.

For the wealthy, a family trust is a way to pass on family wealth.

2. Property safety isolation. Family trust is also a trust business, the trust property is independent of the settlor and the trust company, even if the settlor or the trust company has debt problems, the trust property is not subject to recourse by creditors, cannot be seized and frozen by the judiciary, and cannot be included in the bankruptcy liquidation property. Therefore, another feature of family trust products is the safe isolation of property.

3. Restrain future generations. One of the important features of family trust products is that when the children of the wealthy do not become successful, they can set up a trust**, so that professionals can continue to operate the family business with a professional mechanism, so that the children and descendants will not be deprived of food and clothing due to incompetence.

4. Protection of information. The information of the settlor and beneficiary of the family trust is strictly confidential, and the trust company cannot disclose the relevant information unless it is investigated by the judicial authorities due to illegal and criminal behavior. In this way, the property can be passed on incognito to specific family members, and complex and sensitive family relationships can be handled.