Benefits of Creating a Trust
There are many benefits of creating a trust. Some of the most significant ones are-
1. Creation of trust helps in better planning of tax as the author is no more taxed over the trust property, instead the trustee is taxed for the trust property. An organized and well administered trust can offer many tax rebates and substantial efficiencies.
2. Making a will is often tiresome and needs a lot of disclosure of property, whereas making trust instead would help in maintaining the confidentiality of the author as not much disclosure is required and the person can also save estate duty over the trust property.
3. One can protect their assets via creating a trust. In simple words, the assets which are converted into trusts, and they will no longer be property of the author and it cannot be seized when the settlor (author) faces any financial problems. But the court can set aside the trust deed in certain cases and return the property to the settlor but it still acts as a risk- mitigation approach.
4. Trust helps in avoiding the forced heirship, as this concept is famous in many communities where the property of the deceased person needs to be distributed to their next kin or children, and in cases where the person doesn’t want to share his property with his kin or relatives, then he may opt for better and wider distribution by creating a trust.
5. Trust can also aid in providing support to the weak, as people who are unable to manage their own affairs and children or don’t have the means to do so, then the trust may offer independent help to such people.
6. One of the common motives setting up of trust is to ensure the protection of family assets or help them in growing, any family would like to grow their assets rather than accumulating in few hands, and thus trust is one of the prominent ways to do so and offer flexibility to property and even help the beneficiaries in times of need.
7. Another advantage of trust is that it offers increased flexibility to a property, by creating a discretionary trust where the property is capable of adapting to the changing norms and demands. In this case, settlor can choose a class of beneficiaries and give the discretionary powers to the trustees to distribute the asset as they wish to do. Thus, the beneficiaries only have a contingent interest in this kind of trust.