Trust is an entity first. They are able to possess assets just like businesses or persons. Every trust has a custodian (the person the trust is meant to benefit; this functions similarly to an owner but is not an owner) and a beneficiary (the person who controls the trust). Every year, they normally give the beneficiary a portion of the assets. Usually, this ranges from 2 to 5 percent.
There are, in my opinion, two advantages:
Assets are shielded from taxes passed down through generations. You can name yourself, your children, or anybody else as the beneficiary of your assets if you place them in a trust. Let's look at the first scenario. If you are the beneficiary, you may get 3% of the trust's entire worth each year. You might specify in the trust document that your children would be the next beneficiaries after you. Although they will profit from the trust (and the money! ), there won't be any taxes due because it's not an inheritance.
They protect the assets from both you and creditors. The trust will be safeguarded if you are sued. I have observed the widespread usage of "asset protection trusts" in states like Delaware that have strict asset protection regulations. Nobody can pursue the trust if you are ever sued. You might also place the money in a trust with him as the beneficiary if you have a child you wish to support but are concerned that giving them a large sum of money all at once would cause more harm than good. He will receive advantages in the range of 2 to 5 percent annually, but he is unable to immediately spend the entire amount on fast vehicles and faster women.
The main issue I've observed with trusts is avaricious attorneys convincing unwary clients to act as custodians. It is OK to have a dependable attorney serve as your custodian, but there is no justification for paying that person more than 1% annually (which many will request). The trust's assets should typically be managed by a financial advisor, who will also handle day-to-day administration and payouts. Do not pay someone extra to serve as a do-nothing custodian in order to siphon some cash off the top each year.
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