BusinessDay

Take a ‘Living Trust’ to protect your wealth

Most people avoid thinking about life after death since it is a frightening notion. It is far easier to dismiss inquiries that bring our irrational concerns to life.

For most people, the possibility of their money being unknown or inaccessible to those they leave behind is even more terrifying. These questions drive estate planning as a service in general and living trusts in particular.

Unlike other testamentary estate planning tools, which simply proclaim the maker’s wishes upon their death, a living trust is a dynamic and flexible estate-planning tool.

Picture Ali, a 40-year-old professional who inherited a small plot of land in his village, has a mortgage on his home, owns a few stocks, and works in a co-operative. Ali may consolidate all these assets into a single legal vehicle that is independent from him yet controlled by his wishes, thanks to a living trust. How this works is that Ali will sign a trust deed with a Trustee such as CardinalStone Trustees that contains instruction on how his assets are to be managed, who should benefit from his assets, and how the remainder not specifically shared should be treated.

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Living trusts have a chosen representative who acts on Ali’s behalf if he dies or becomes disabled, in addition to dealing with how Ali wants his assets transferred. This person’s responsibility is to make sure that the Trustee fulfills the legal obligation to act in the best interests of the trust. A living trust has the added benefit of allowing Ali to benefit from the trust while he is still alive. For one thing, Ali can enlist the trustee’s help in actively managing the house he inherited from his father, such as collecting rent and overseeing its upkeep.

He could also ask the Trustee to assist him in deciding which stocks to keep and how to diversify his portfolio so that future generations can benefit from it.

Furthermore, the trust’s assets are not subject to claims from creditors or law enforcement because Ali no longer owns the assets in the eyes of the law, the assets are now owned by the Trust.

As previously mentioned, Ali’s profits from a living trust persist beyond his death. A living trust does not necessitate any probate procedures. When the Trust Deed’s events, such as death occur, the Trustee is instantly empowered to administer the deceased’s assets. This means no more endless correspondence with the probate register or rushing to perfect title documentation. Ownership has already passed to the Trustee under a well-constructed trust, and all that remains is to carry out Ali’s instructions.

A living trust also eliminates the nearly inevitable struggle for assets that leads to litigation. The operation and storage of assets by the Trustee eliminates the issue of authenticity, allowing for a smooth distribution. Even if Ali’s family is unaware of his assets, such as his shares, the Trustee has an obligation to and will do so.

Finally, take Ali’s case and talk to a financial advisor about establishing a living trust now, experts at CardinalStone Trustees said.