{"id":6772,"date":"2025-08-15T08:25:04","date_gmt":"2025-08-15T06:25:04","guid":{"rendered":"https:\/\/www.thelife.digital\/tl\/?p=6772"},"modified":"2025-08-15T08:25:04","modified_gmt":"2025-08-15T06:25:04","slug":"is-a-family-trust-the-right-move-for-you","status":"publish","type":"post","link":"https:\/\/www.thelife.digital\/tl\/articles\/is-a-family-trust-the-right-move-for-you\/","title":{"rendered":"Is a Family Trust the Right Move for You?"},"content":{"rendered":"\n

When it comes to estate planning, few decisions are more complex\u2014or more personal\u2014than whether to establish a family trust. High-net-worth individuals often grapple with this choice, prompted by advice from financial advisors, legal professionals, or well-meaning friends. While trusts can serve as powerful estate planning tools, they are not a one-size-fits-all solution. The key lies in understanding whether their benefits align with long-term financial and familial goals.<\/p>\n\n\n\n

\u201cFamily trusts are often promoted as a silver bullet for wealth protection, but the reality is far more nuanced,\u201d says Stacy Rouchos, managing director of Bannister Trust, an estate and succession planning advisory firm to Hobbs Sinclair. \u201cA trust can absolutely safeguard generational wealth and provide asset protection\u2014but only if it\u2019s properly set up, actively managed, and regularly reviewed to adapt to changing financial and legal landscapes.\u201d<\/p>\n\n\n\n

The Benefits\u2014and the Catch<\/strong><\/p>\n\n\n\n

Trusts offer several well-known advantages: they can shield assets from creditors, ensure financial stability for future generations, and maintain privacy over one\u2019s estate. They may also serve as an effective tool for estate duty reduction. But they come with strings attached.<\/p>\n\n\n\n

\u201cDissolving a trust is far from straightforward\u2014it can be legally and administratively burdensome,\u201d Rouchos cautions. \u201cToo often, we meet clients who didn\u2019t fully understand the long-term commitments involved. Once a trust is established, unwinding it can be costly and time-consuming.\u201d<\/p>\n\n\n\n

Loss of Control & Risk of \u201cSham Trusts\u201d<\/strong><\/p>\n\n\n\n

One of the most misunderstood aspects of trust ownership is the required separation of control. According to the Trust Property Control Act<\/strong>, once assets are transferred to a trust, the donor must genuinely relinquish control to ensure compliance.<\/p>\n\n\n\n

\u201cSARS is cracking down on sham trusts\u2014those where founders try to keep one hand on the wheel,\u201d says Rouchos. \u201cIf there\u2019s no clear separation between the founder and the assets, the trust could be disregarded for tax purposes, and income could be taxed in the founder\u2019s hands. That\u2019s a costly mistake.\u201d<\/p>\n\n\n\n

She adds that many older trusts have not been reviewed in decades. \u201cIf your trust deed still reads like it was drafted on a typewriter in 1987, it\u2019s probably time for a compliance audit.\u201d<\/p>\n\n\n\n

The Real Cost of Running a Trust<\/strong><\/p>\n\n\n\n

Beyond initial setup fees, family trusts come with ongoing legal and administrative responsibilities. Under current regulations, every trust must appoint an independent trustee\u2014someone who manages trusts as part of their day-to-day profession and who must be compensated accordingly.<\/p>\n\n\n\n

Trusts are also required to:<\/p>\n\n\n\n