An introduction to:
Trusts
Trusts
Most people assume Trusts are only used by wealthy families but you've probably benefited from trusts your entire life..
In reality, many of the institutions people interact with every day are Trusts or rely on Trusts.
- Pension Funds and retirement accounts
- Universities & Charities including hospitals
- Private Family Wealth Trusts
Trusts have been used around the world for centuries because they solve a remarkably simple problem:
How do you ensure that important assets continue to serve their intended purpose over long periods of time?
A Trust Is A Vehicle For Stewardship
People often compare Trusts to companies.
While both are widely used legal structures, they exist for very different purposes.
| If You Want To... | Use... |
|---|---|
| Run a business | A Company |
| Hold personal cash | A Bank Account |
| Manage/protect assets for a long-term purpose | A Trust |
A company is designed to conduct business activities.
A Trust is designed to hold and administer assets according to predetermined rules and fiduciary duties.
Why Are Trusts So Widely Used?
A Trust legally separates assets from the individual, similar to how putting assets into a Company does so.
The difference is that Trusts are typically focused on managing and protecting assets rather than using the assets for a business purpose.
For centuries, families, charities and institutions have used Trusts to preserve and manage wealth according to long-term objectives rather than short-term circumstances.
This simple idea has made Trusts one of the world's most enduring and internationally respected wealth structures.
How Does A Trust Work?
Every Trust has three key participants:
The Settlor
The person who contributes assets to the Trust.
The Trustee
The person or institution responsible for administering the Trust according to its governing rules and fiduciary duties.
The Beneficiary
The person or people who benefit from the Trust.
The Trustee does not own the assets for their own benefit. Their role is to administer the assets in the best interest of the beneficiaries of the Trust.
Note: When we refer to “Members”, we are referring to the Beneficiary whom is also ordinarily the Settlor as well.
Why Does Tontine Trust Use Trusts?
A Tontine is a strategy for sharing longevity risk.
The Member enjoys the benefit of their wealth while they are alive but those assets need to be shared when the Member has passed away.
A Trust is the legal structure that makes it possible because the Trustees are irrevocablyAn irrevocable trust is a standalone legal entity established under common law by a fiduciary for the benefit of one or more beneficiaries. Irrevocable trusts are often formed in jurisdictions where they are sheltered from taxation and in which the assets of the trust are protected from creditors. instructed in the Trust Agreement to redistribute the assets upon the death of the Member.
What this means is that, once assets are contributed to the Trust, they cannot ordinarily be claimed by creditors or inheritors either during the Members lifetime or upon the Members death.
A Tontine Trust Fund combines the proven asset protection of a Trust with the benefits of longevity pooling.
This allows the assets to be administered according to long-term objectives of helping members enjoy more retirement from the wealth they already have.
Trusts Have Endured For A Reason
Technologies change.
Markets change.
Governments change.
Yet Trusts have remained one of the world's most widely used structures for preserving and managing wealth, sometimes over centuries.
Their enduring popularity comes from a simple idea:
Important assets should be administered according to long-term objectives rather than short-term circumstances.