What Are Wills, Trusts, and Their Key Difference?
Why is it necessary to have a Will?
Will is necessary for the following reasons:
- Choose beneficiaries and determine manner of distribution of assets;
- Appoint executor (Probate and Administration Act 1959) to apply for grant of probate and to execute, identify, pay all debts and distribute the remaining assets according to the terms of the will;
- Appoint guardian (Guardianship of Infants Act 1961) in the event there are minors left behind.
In the event there is no will, it would be considered as died “intestate” and Distribution Act 1958 would apply. The estate of the deceased would be distributed in accordance to the Act and issue might arise as the distribution might not be in accordance with the intention of the deceased.
Additionally, if it is intestate, there would be a need to apply for letter of administration which would lead to more cost and time, requiring an administrative bond and the appointment of 2 sureties to guarantee the estate value and proper administration of the estate. In contract, the application for grant of probate would be more cost effective and time efficient.
When will we need to set-up trust, types of trust and what are the significance of having one (or multiple)?
In life, not every situation revolves around death. There could be occasions where the client becomes disabled, impaired, unable to manage his/her own finances for whatsoever reason. In such situation, having the right trust set-up would benefit the client in various manner as below:
- Serves as an “emergency fund” for the Settlor and family;
- Avoids the wait for the application of grant of probate before accessing the assets;
- Provides privacy to client’s distribution (grant of probate are publicly available, therefore if a testamentary trust is set-up in a will
- the beneficiaries and distribution would be publicly known);
- Assets are held by trustee, therefore avoid any possible challenge by heirs of the Settlor’s estate (for irrevocable living trust);
- Various trusts could be set-up, planned and structured for various reasons such as retirement planning, children education planning, charity and many more.
What is an Offshore Trust and what are its key benefits?
An offshore trust is a legal framework set up in a foreign jurisdiction where a trustee manages and holds assets. It serves purposes like safeguarding assets, facilitating estate planning, and optimising tax strategies.
Who stands to gain from Offshore Trust Services, and are they exclusively for the affluent?
Offshore trusts cater to the needs of individuals, families, and businesses seeking to shield assets, address estate planning concerns, and mitigate tax obligations within a global context. They provide benefits to a wide range of individuals, not just those with substantial wealth.
How do Offshore Trusts safeguard assets?
Offshore trusts provide a legal shield against creditors, legal claims, and potential financial threats. Assets held within these trusts are often insulated from legal challenges.
Are Offshore Trusts within the bounds of the law?
Absolutely, offshore trusts are perfectly legal when established in accordance with the laws and regulations of the chosen offshore jurisdiction. Collaborating with legal experts ensures compliance.
What role does the trustee play in an Offshore Trust?
A trustee shoulders the responsibility of asset management within the trust. This includes making investment decisions and distributing assets to beneficiaries as per the trust’s terms.
How are tax implications managed when using Offshore Trusts?
Tax implications differ based on the offshore jurisdiction. Certain jurisdictions may offer tax advantages, while others may necessitate adherence to reporting requirements in your home country.
Can Offshore Trusts be employed for international business activities?
Indeed, offshore trusts can be advantageous for structuring international business endeavours and managing assets tied to global business activities.
How can I determine the most suitable offshore jurisdiction for my trust?
The selection of a jurisdiction should take into account factors like privacy laws, legal stability, tax considerations, and specific needs. Legal and financial experts can offer guidance for an informed choice.
What's the process for establishing an Offshore Trust, and do they come with reporting requirements?
Establishing an offshore trust entails collaboration with legal and financial professionals experienced in offshore services. They will assist in navigating legal requirements and choosing the appropriate jurisdiction. In many countries, individuals must report offshore trusts or foreign financial interests. Maintaining compliance with tax authorities in your home country is crucial.
How can I ensure the privacy of my Offshore Trust, and is it possible to amend its terms after establishment?
Upholding privacy often hinges on the jurisdiction you select. Opting for a jurisdiction known for robust privacy protections and engaging trustworthy professionals is essential. It’s feasible to modify the terms of an offshore trust, although the specific process depends on the trust agreement and the jurisdiction. Legal advice should be sought for guidance.
What happens upon my passing as the trust's grantor?
The distribution of assets to beneficiaries will follow the terms outlined in the trust. It is imperative to engage in proper estate planning to ensure your wishes are carried out.
