What are the advantages and disadvantages of family trust funds?
Advantages of family trust:
1. can handle more types of attributes.
Unlike insurance that can only handle cash assets, family trusts and wills can handle more types of property, almost all types of property, even art collections and patent rights. Family trust, in particular, is more flexible than any financial management tool at present. However, there are still some restrictions on the handling of some types of property in domestic family trusts. With the gradual popularization of family trust business in China and the gradual improvement of relevant laws and regulations, the types of property that domestic family trusts can handle will be gradually enriched.
2. Broader beneficiaries
The beneficiary of the will is any person or institution other than himself; The beneficiary of insurance is usually the person who is related to the insured and the insured; The beneficiary of family trust can be a natural person, an unnatural person or even an unborn person.
3. Preservation and appreciation of property
Will may lose the original value of property in the process of inheritance; Insurance has a stable and certain value-added function; The trustee of family trust is generally a professional trust institution, with a professional investment team, following the principles of honesty, credit and diligence, managing, using and disposing the trust property in accordance with the trust contract, combining long-term strategic asset allocation with short-term tactical asset allocation, realizing the global allocation of assets and distributing them in different countries and regions, and finally achieving the effect of dispersing risks through different asset categories and property forms, thus better realizing the preservation and appreciation of property.
4. The function of asset isolation
Will has no asset isolation function; Insurance has the function of asset isolation, but there is a risk that the policy will be enforced according to law; Due to the independence of the trust property and the four situations stipulated in Article 17 of the Trust Law, the family trust can not be enforced on the trust property, which makes the family trust play a role of risk barrier in bankruptcy, debt, divorce, criminal recourse, etc., and does not maliciously evade debts, thus playing the role of asset isolation.
5. Inheritance of spiritual wealth
Will can inherit property, but it can't avoid the profligacy of future generations; Insurance cannot avoid the profligacy of future generations, but some policies can realize the regular distribution function similar to family trust through the function of installment payment; The trustor of a family trust can flexibly formulate personalized trust terms in the trust documents according to his reasonable and legal inheritance wishes; It inherits wealth in the form of contract terms, without notarization of inheritance rights, which can realize uncontroversial inheritance of wealth more efficiently and avoid the loss of inheritance to the maximum extent; Behavior can be guided by the benefit distribution mechanism of the trust clause, which is similar to the incentive mechanism of parents to their children. It has irreplaceable advantages in the inheritance of spiritual wealth and can meet the needs of many high-net-worth people for family style construction and behavioral guidance for future generations. At the same time, the contract of family trust can set anti-profligacy clauses to avoid the risk of profligacy of future generations.
Step 6 be confidential
The will is not confidential and needs to be made public when it is inherited; Insurance is confidential, and the beneficiary does not need to inform other beneficiaries when receiving the insurance money; The confidentiality of family trust comes from the provisions of Article 33 of the Trust Law: the trustee is obligated to keep confidential the handling and information of the trustor, beneficiary and trust affairs according to law. It is strictly protected by the trust law. It is illegal for a trust company to disclose family trust information without reason.
Disadvantages of family trust:
1. The cost is high.
Family trust is powerful, involving tax, law, investment and other professional fields, and needs professional operation. The more complicated, the higher the cost. Domestic family trusts may have to pay taxes when transferring trust property. For example, in a real estate family trust, when the client transfers the real estate to a trust company, it needs to make a transactional transfer, and the tax to be paid will be higher.
2. No lever function
Wills and family trusts have no leverage compared with insurance. But family trust is not a simple financial product, but a legal framework design, which can't be bought, but can only be established.
A family trust fund is a trust fund for the property of a family (or family business). According to the instructions of the person (trustee) who intends to set up a family trust fund, a specialized institution or individual (trustee) with professional knowledge is entrusted to set up a family-specific trust fund for professional management and application, so as to avoid the division or seizure of property and protect the rights and interests of beneficiaries.
So much about the pros and cons of family trust funds, I hope it will help you.