FAMILY TRUST Meaning and
Definition
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A family trust is a legal entity established by an individual for the purpose of preserving and managing their assets for the benefit of their family members. It typically serves as a means of passing down wealth from one generation to another while minimizing estate taxes and maintaining control over the assets.
In a family trust, the person who creates the trust (known as the settlor or grantor) designates specific property or assets to be placed into the trust. The trust is managed by a trustee, who can be the grantor themselves or a designated individual or entity, responsible for administering the trust according to the terms and conditions outlined in the trust document.
Family trusts can be revocable or irrevocable. Revocable trusts allow the grantor to retain control and make changes to the terms of the trust during their lifetime, while irrevocable trusts cannot be altered once established. One of the primary benefits of family trusts is their ability to provide asset protection and continuity, as the assets are shielded from potential creditors and can be passed down to beneficiaries outside of probate, thus avoiding public disclosure of the estate.
These trusts are often used for estate planning purposes, enabling the grantor to distribute their assets to family members, such as children or grandchildren, in a structured manner while ensuring the assets are safeguarded and managed by a trusted party. Overall, family trusts provide a flexible and strategic approach for individuals looking to protect and transfer wealth to their loved ones.
Common Misspellings for FAMILY TRUST
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Etymology of FAMILY TRUST
The word "family" originated from the Latin word "familia", which referred to a household including servants and slaves and denoted a group of people living together and sharing common domestic necessities. It is derived from the Latin word "famulus", meaning servant or slave.
The word "trust" has a different etymology. It dates back to the Old Norse word "traust", which meant confidence or reliance. The term was later adopted into the English language through Old French as "truste" in the 13th century.
The combination of "family" and "trust" gave rise to the phrase "family trust". The term generally refers to a legal arrangement where assets are held and managed on behalf of family members, often for the purpose of estate planning or providing financial security.
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