June 30, 2023

Categories: Planning

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We have looked at what a living trust is in my earlier article. To recap, a living trust is a legal document that allows you to place your assets, such as property, investments or bank accounts, into a trust during your lifetime. This trust will be managed by a trustee, who can either be yourself or someone you appoint.

Here are some ways that a living trust can help protect your assets:

Avoiding the probate process:

Probate is a court-supervised procedure that validates a will and distributes assets after an individual’s death. It can be time-consuming and incur unforeseen financial costs. By placing your assets in a living trust as part of your holistic estate plan, they can be passed directly to your beneficiaries.

Planning for the “what-ifs”:

You can design your living trust to include provisions for managing your assets should you become incapacitated or unable to handle your financial matters due to illness, disability, or any other reason. The designated trustee can step in and manage the trust on your behalf – this can help ensure a seamless transition without the need for legal intervention or proceedings.

Protecting your assets from creditors (in certain circumstances):

For example, if you should face situations such as bankruptcy, divorce or legal action, the assets in your trust may be shielded from creditors’ claims.

Offering flexibility and greater control:

With a living trust, you can retain control over your assets while alive and specify how they should be managed and distributed after your death. You can set conditions, such as age or milestones, for beneficiaries to receive their inheritance. This allows you to protect assets from being squandered or mismanaged by heirs.

All in all, it is still important to note that while a living trust can offer the benefit of asset protection, it is not a shield against all forms of liability. For example, with the regulation that subjects transfers of residential properties into a living trust to an Additional Buyer’s Stamp Duty (ABSD) of 35%, one might want to reconsider how they would like to design their living trust.

It is always wise to consult with an experienced consultant with estate planning knowledge, to understand more and help you to tailor your trust to meet your unique financial needs and life circumstances. I would be happy to speak more.

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