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ALL ABOUT TRUST

What Is Trust?

A Trust is an estate planning instrument for an Individual to ensure the total protection of asset(s) is preserved for

the beneficiaries while in the safe hands of the Trustee.

There are three parties involved in a Trust.

1. The settlor- person who sets up the Trust.

2. The Trustee - the person or a corporation who manage the Trust assets.

3. The beneficiary - the person who receives benefits from the Trust.

How Does a Trust Works?

The Trustee receives the assets from the Settlor and is legally obligated to hold and manage the assets for theenjoyment of the beneficiaries during the trust period set by the Settlor. I t is comm only known as " Liv ingTrust"

Who is the Protector of a TRUST?

A person appointed by the settlor with the following job scope:

1. Act as a watchdog for the settlor when he passed on

2. Advise the trustee on the needs of beneficiaries

3. Recommend payment to beneficiaries using Letter of Wishes

4. Has the power to remove and replace the Trustee.

What Assets Can Be In The Trust?

The assets commonly used to set up a trust are: cash, insurance policies, unit trust, properties, shares.

The property under Trust does not belong to the Trustee personally. Though the trust property is registered in theTrustee's name, it is NEVER part of the Trustee's own properties when he dies. Only the Trust beneficiaries willbe entitled to the Trust Fund NOT the Trustee's own beneficiaries.

Example of Common Usages of Trust

1) Distributing Wealth to Avoid Probate

Trust of this nature is useful when you have:

1. Minor children and spouse who is a homemaker or earning not as much as you

2. Special children requiring funds for medical, education and living expenses.

3. Have a 2nd Family to provide for

4. Financing children's tertiary education.

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2) Protecting Wealth

Protecting Against Wasteful Beneficiaries

The Protector appointed will ensure there is no wastage of moneys receive under the Trust. Protector can stopdisbursement of fund to undeserved beneficiaries.

Against Creditors of Settlor and Beneficiaries

Protector will instructs Trustee to stop the disbursement of fund when any beneficiary has become a bankrupt.

Protecting Wealth Against the Settlor's Creditors

When a person becomes a bankrupt, usually an investigation by the authorities is done to recover assetstransferred up to 5 years prior to bankruptcy. The suspicious transfers will be nullified to recover the assets to paythe creditors.

3) Protecting Wealth Against the Beneficiaries' Creditors!

This is achieved by creating a Discretionary Trust when any of the beneficiary becomes bankrupt, he will nolonger be entitled to the benefit under the Trust.

4) Preserving Wealth for Your Great Grandchildren

Preserving assets for your great grandchildren.

5) To cater funds for various family situations

For example, education and Maintenance fund for grandchildren, nephews etc

Why do people setup trust? because

* Assets held under Trust are not frozen upon demise.* For the distribution of wealth, including periodical payment.* To ensures the wealth is protected against lawsuits as well as creditors.* The preservation of wealth.* Fulfilling various personal objectives, including such as maintenance of dependents and education funds.

Benefit of a living trust

1) Distr ibutes the way you want i t to

For example, set goals to be achieved (such as a college degree) before your loved ones receive anything fromthe trust or to be used for their medical expenses. This avoids wastage of the trust fund.

2) You decide wh o is to receive

Just like a Will, its your choice, no one can challenge it.

3) No fus s and instant ly avai lable as i t is n ot part of the estate

No lengthy legal procedure to adhere. Trust Fund is readily available for the beneficiaries' use because it is in theTrustee's name. It complements the Will you wrote.

4) Have a peace of min d

Once the trust is created and the Protector appointed, the well-being of your beneficiaries are taken care of.

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5) Get assets p rotected from credi tors - Ir revocable Trust

When assets have been in the trust for more than 5 years.

6) Not easily con tested

Disgruntled family members who are not receiving anything from the trust are unable to make claims against thetrust because the assets are no longer under your name.

7) Your instruc t ions on distr ibut ion in th e Trust Deed can prevent your weal th from being s quandered

A comparison between a Will and a Trust