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Trusts vs Wills
Trusts
A trust is a more complex arrangement and is often more extensive than a simple will, however, for the right person, a trust offers significant advantages. A trust is established by the “settlor” (probably yourself and your spouse), who set up a trust deed, which describes one’s assets, ones beneficiaries and the circumstances by which the assets will be transferred in whole or in part to them.
The trust is administered by the trustees, who in common law countries are recognised as the beneficial owners of the assets held within the trust. In many regimes, trustees are subject to local taxes at rates different than those of the settlors and those of the beneficiaries. In particular, as trustees are often professional firms, they do not guide and may not, therefore, be subject duty, gift tax or inheritance tax. In the event of one’s death, trustees are already in place and will administer one’s affairs in accordance with the trust deed and other instructions that may have been given to them. Although a trust deed is a registered document, it does not become public property, so one’s affairs remain confidential.
The suitable use of trusts can provide extremely effective and flexible confidential means of managing one’s affairs and assets both in one’s lifetime and upon death. Indeed trusts could, if required, hold assets for several generations. They, therefore, offer potentially greater tax advantages, greater control and greater confidentiality than can be achieved through a will. They are, however, more expensive than wills, both to establish and to maintain, so a full discussion and analysis is often necessary to suggest which might be a better route. Tax Associates International (TAI) is happy to provide this service. TAI can provide both wills and trusts appropriate to our clients’ needs. Please ask us for a consultation to see which suits you best.
Wills
A will is a formal statement signed before witnesses, which sets up your assets, your beneficiaries, the circumstances under which you would wish assets to be transferred to them and any caveats or conditions that you wish to apply. In the event of one’s death, an “executor” appointed within the will will have the legal responsibility of gathering in your assets, paying your debts, applying for probate from the jurisdictions in which you have tax exposure, settling any tax that is due and then distributing the residual estate in accordance with your wishes. In many jurisdictions, your will is not of itself binding, in some, your beneficiaries, acting together can set aside some or all of your will; in others, local law or custom can override your wishes for at least some or perhaps the larger part of your assets. On probate being granted, the will becomes public knowledge, so anyone can see the size of your estate and its main constituents.
Related Services
Succession Planning
Succession planning involves looking ahead and making arrangements now, so that in the event of one’s death or serious permanent disability one’s affairs and the value of one’s estate can pass appropriately to those who will reap the benefit from them or will be required to carry the affairs forward. Thoughtful planning now, while one is in full control of one’s facilities, ensures that one’s wishes are carried out in the future.
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