Some Purposes of a Living Trust

There are several possible reasons why a trust is made.Pension plans are one of the reasons why people prefer to create a trust. It is because pension plans can be set up as a trust: the employer can be the settlor and the employees can act as the beneficiaries. Some companies and business arrangements, like those involved in finance and insurance, can use trusts in their corporate structure.

Asset protection is also one of the main reasons. With asset protection, you can separate yourself from the property and assets you own and no one else can touch them unless it is what you have intended with it. You can protect your assets by creating a discretionary trust where you, as the settlor or creator of the trust, can be the protector of your assets as well as beneficiary, but not a trustee and not the only beneficiary. In doing so, the settlor can benefit from the trust without owning the assets and he/she can also prefer anonymity. However, some types of asset protection are legal and moral, while some are not.

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A trust can also aid in co-ownership of a particular piece of property, as the ownership of more than one person is managed through a trust. Usually, property shared, like a matrimonial home, for example, is seen in a trust, with the married couple as the beneficiaries and one or both of them as the trustees.

However, trusts can also be used for illegal reasons. Some people evade paying taxes by concealing their income in a trust, as a trust tends to preserve someone’s anonymity as he/she wishes it. Money launderers are also attracted by the advantages of a trust, and employ techniques related to money laundering by passing them off as techniques similar to those employed in asset protection.

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