What shall I consider when settling a trust?
Are you thinking about an APT?
This post concerns a few basic features that should be considered when settling a trust. Its important to note that nothing in this post or blog should be construed as advice. This post is simply a forum by which practitioners and interested persons can comment on the best succession planning options available.
The basic features that should be considered when settling a trust are:
What form of Trust shall I use?
- Answer: Asset Protection Trust: The key features of this robust and dynamic form of trust include: its flexibility, its discretionary nature and its capacity to endure perpetually
Do I need a Holding Company?
- Answer:Yes, International Business Company (I.B.C): An I.B.C. is frequently used together with an Asset Protection Trust to properly custodize the trust fund. This arrangement provides significant tax benefits against U.S. estate taxes as well as succession planning when owned by a trust.
How do I get the trustee to exercise it’s discretion?
- Answer: Letters of Wishes (L.O.W.): LOWs are most often more definitive than the trust instrument. Whilst the trust is considered a core document that contains the terms and conditions of the fiduciary relationship, the LOW is non binding and will usually contain the specifics of the settlor’s intent.
How do I vary the trust if required?
- Answer: The Trust Protector: The protector provides a means by which the trustee can add further value to the administration of the trust.
Who will manage the trust investments?
- Answer: A settlor appointed Investment Advisor: The IA of an Asset Protection Trust (APT), is tasked with the very important function of growing and perpetuating the trust fund on behalf of the beneficiaries.
The complexity of a trust instrument depends entirely on the dynamics of the family and purpose of the trust. With this in mind, its important to build provisions in to the trust that provide for maximum fiduciary oversight with minimum fiduciary involvement. E.g. The appointment of an investment advisor and protector. See posts below.
Are the features referred to above included in your trust? Are you thinking about settling an asset protection trust?
