Supporting Relatives in Need Through Estate Planning

People who provide financial or other support to relatives can continue to help them after they die through estate planning. If you do not have a will or any other estate planning structures, but you give financial support to family members regularly or otherwise help them, consider making an estate plan.

One great way to support relatives over time is through a trust. Trusts are useful for long term support because the trustees can continue to distribute money from them over a long period of time, even after the people who form them are deceased. A trust is a legal document explaining that a trustee will hold legal title to certain property in trust for the benefit of beneficiaries.

When you contribute property or assets to a trust, the trustee must responsibly manage it in the best interests of the beneficiaries. Depending on what the trust document says, the trustee can make distributions from the trust regularly or in times of great need. The trust will continue to exist for as long as the trust document specifies – including long after the person who forms the trust has died. In this way, you can provide for relatives who need your help for many years to come.

Another way to help relatives financially is by making a will. A will is a document that explains how you would like your estate to be distributed after death. Without a will, your estate will most likely go to your closest relatives such as your spouse and children. If you support your parents or other relatives, they may not inherit anything. Your will can say that you want to make specific gifts of money or property to the people you want to support. A will usually contains outright gifts only but it can be prepared in such a way that a trust comes into existence when the person making the will dies.

You can also contribute financial support to relatives through life insurance. Life insurance pays a lump sum to a beneficiary of your choice. You can even choose a trust as the beneficiary in some cases.

Finally, if your support for a relative comes in the form of time or medical care, consider signing am enduring power of attorney. This document appoints someone to take care of your affairs if you cannot. That person could arrange for care on your behalf if you are unable to do so.

To find out more about estate planning in The Bahamas, visit Gonsalves-Sabola Chambers online or call the office at +1 242 326 6400.

 

The hiring of an attorney is an important decision that should not be based solely upon the information contained in this website.  This website is designed for general information purposes only and the information provided should not be construed to be formal legal advice nor the formation of an attorney/client relationship.

Trust Companies in The Bahamas: The Basics

In The Bahamas, private trust companies act for individuals or firms, often as part of broader estate planning for families. Trust companies are empowered to do things on others’ behalf such as making transactions or managing funds.

Like agents, trustees, and fiduciaries, trust companies take actions for others for someone’s ultimate benefit. In fact, families can use trust companies as a substitute for a trustee of a family trust, which might otherwise have an individual trustee. For example, a trust company could hold the legal ownership of all the shares in a family business. The trust company would manage the shares and the business, while the family members remained as beneficiaries of the family trust.

The family members could receive distributions from the trust company derived from profits of the business, or receive salaries from the trust company for their work for the business. Further, the family members could serve on the board of the trust company, allowing them to make decisions about the family business’s direction. Through the trust company, the family members could maintain involvement in the business without themselves holding any direct ownership in it.

The trust company structure has several advantages. It lets family members make decisions relating to the trust’s administration, when with an individual trustee the family members would have little involvement in these decisions. It can add confidentiality protections for people concerned about privacy. Also, trust companies can operate forever, unlike individual trustees who must be replaced when they can no longer serve the trust.

To create a Bahamian trust company, one or more designating persons must draft a designating instrument (a written document) or direct that an instrument be drafted on their behalf. This instrument explains the makeup of the trust company. If there is more than one designated person named, they must be related to one another by blood or marriage. (See Banks and Trust Companies Regulation Act, 2000 and Banks and Trust Companies Regulations (Amendment) Act.)

Private trust companies are managed, in part, by registered representatives. These representatives must be either Central Bank of The Bahamas licensees or financial and corporate services providers with Central Bank approval. They provide services to trust companies, which may include acting as the Bahamian registered agent, secretary, or director. Officers of the trust company, such as family members, could fill these positions instead of the registered representative.

Trust companies sometimes must have a special director as well. The special director should have knowledge of trust administration or experience in some other area related to trust administration (such as law or finance). If a registered representative is both a director and a Central bank licensee, then the trust company does not need a special director.

To learn more about private trust companies, visit Gonsalves-Sabola Chambers online or call the office at +1 242 326 6400.

 

The hiring of an attorney is an important decision that should not be based solely upon the information contained in this website.  This website is designed for general information purposes only and the information provided should not be construed to be formal legal advice nor the formation of an attorney/client relationship.

Choosing a Trustee for Your Bahamian Trust

For persons interested in establishing trusts to hold some of their assets as part of an estate plan, choosing a trustee will be an important task. Picking the right person or entity that will manage these assets for the life of the trust makes a difference in the operation of your trust and the benefit your trust gives to the beneficiaries.

What Are Your Goals for the Trust?

The best trustee to choose could vary depending on your goals for the trust. If you are forming the trust primarily to remove assets from your estate so that your relatives do not have to go to probate court, you may want to choose a family member or friend as trustee. Alternatively, you might want to select a family member for a trust that will require the trustee to make decisions about distributions to your family members. Relatives are much more familiar with family dynamics than strangers. If you want your trust to provide income that can support a family member in need, you may want a trustee who makes smart investment decisions or has professional investing experience.

You also have the options of choosing a professional trustee or forming a private trust company to manage the trust. Professional trustees include bankers, investment managers, and lawyers, among others, who manage many trusts at the same time. They know which steps to take to best manage the trust and are familiar with trust law. The downside is that the cost of using these professionals can be high.

Which Assets Will the Trust Hold?

You may want to select a trustee who has expertise in managing the particular type of assets you plan to place in the trust. For example, if you plan to place all of your real estate in the trust, you may want to choose a trustee who already knows how to manage real estate. If your candidates for trustee have no experience in real estate, they may need to find and pay for professionals to advise them on real estate matters. This will cost the trust money, detracting from your goals.

How Much Money Is in the Trust?

If your trust will hold a substantial number of assets or assets with great value, you may want to select a professional trustee with experience managing assets. Your trustee will need to invest the assets and try to make them profitable. Many family member trustees do not have the experience or abilities to do this, let alone the time to manage a portfolio. In contrast, a family member may be the perfect choice to manage a small trust with a few treasured family heirlooms and a small amount of money as its assets.

To find out more about forming trusts and choosing trustees, visit Gonsalves-Sabola Chambers online or call the office at +1 242 326 6400.

 

The hiring of an attorney is an important decision that should not be based solely upon the information contained in this website.  This website is designed for general information purposes only and the information provided should not be construed to be formal legal advice nor the formation of an attorney/client relationship.

Can Estate Planning Protect Your Assets from Creditors?

When people begin to think about making an estate plan, they may wonder whether estate planning can protect their assets from creditors. Asset protection is certainly a valid goal sought by many planning their estates. But do not start moving money around now without understanding how estate planning can protect you – and its limitations.

How Creditors Can Access Your Assets

When you hold assets in your own name, such as money in your bank account or property with your name on the deed, creditors can find them and access them to satisfy debts you owe. All they have to do is locate the assets and follow court procedures to obtain a judgment and enforce the judgment against the assets. Unless you pay your debts off, the creditors can take your assets away from you.

When Creditors Cannot Access Your Assets

Estate planning focused on asset protection primarily works by removing assets from your direct ownership. Often  this may involve either setting up a trust or incorporating a holding company. Trusts work by removing direct ownership of assets from the original owner, who gives the assets over to a trustee. The trustee has legal ownership of the assets, while beneficiaries retain beneficial ownership. The original owner signs a legal document that obligates the trustee to act in the best interests of the beneficiaries.

Generally, as long as the original owner of the assets (also called the trust settlor) gives up all control over the assets when they are placed in trust, creditors usually cannot access the assets. They no longer belong to the settlor. Some types of trusts allow the settlor to maintain some control over the assets; these are not effective for asset protection.

Assets can also be transferred to or held in the name of a company which becomes the legal and beneficial owner of the assets.  The concept of separate legal personality of a company from its shareholders means that the debts of the individual shareholder cannot be enforced against the assets of the company.  This is so unless the court is able to pierce the corporate veil and treat the corporate structure as the alter ego of the shareholder.Speak to an estate planning attorney to learn what is best for you.

Avoid Fraudulent Transfers

Unfortunately, if you already have a judgment against you or are expecting that creditors will soon try to collect your debts, you have fewer options. The law prohibits fraudulent transfers of assets, meaning those performed with intent to deceive or prevent creditors from collecting their debts. If someone learns of a pending collections action and transfers all his assets to a trust the next day, the court may set aside his transfer because it shows an intent to defraud the creditors. Intricate laws like the fraudulent transfer prohibition are why consulting an estate planning attorney is especially important if your goal in forming a trust is to protect your assets.

To find out more about making an estate plan in The Bahamas, visit Gonsalves-Sabola Chambers online or call the office at +1 242 326 6400.

 

The hiring of an attorney is an important decision that should not be based solely upon the information contained in this website.  This website is designed for general information purposes only and the information provided should not be construed to be formal legal advice nor the formation of an attorney/client relationship.

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