• Nov 16
• Mkama Magoti Kalebu
• 4 comments

TRUST AS MEANS OF ESTATE PLANNING

A Trust is a legal arrangement that includes grantor, trustee and beneficiary, whereas the grantor deposits assets into trust and the trustee is responsible of administering the trust for the benefit of the beneficiary.

There are various ways of estate planning and trust is one of the best way of estate planning which help in escaping probate procedures so beneficiaries get the chance to access the trust assets quickly. This help the grantor to protect their assets and ensure that their assets will be provided to their beneficiaries. Trust are mostly used by persons who want to make sure their financial legacy is carried out of their wishes.

Trust can be of several types, but some are revocable and irrevocable whereas revocable trust its flexible it allows changes of beneficiaries and assets while the grantor is still alive, for stance adding assets and take them out. While irrevocable it is not flexible it does not allow changes it is permanent, grantor cannot change assets or beneficiaries.

Things that a person can create trust on are like; estate planning, assets protection, education expenses and special needs provisions.

In order to create a trust the following should be followed:

a) There must be a grantor, trustee and beneficiary.

b) Select the assets.

c) Choose the type of trust.

d) Preparation of trust document.

Advantages of creation of a trust.

a) Privacy, unlike probate no involvement of the public record.

b) Short procedures so it make your family life much easier.

c) Great control of the asset distribution to your beneficiaries.

d) Respecting and following the wishes of the maker after death.

Disadvantages of trust

a) No income tax savings, because while the grantor is still alive, will continue to pay taxes for the assets because a Trust does not have its own TIN (Tax Income Number).

b) If not exempted trusts are subjected to tax separately from their heirs.

And, one can create a testamentary trust it is a trust in a will, this can be dangerous once a will is invalidated by the court even the trust will be invalid. But one can create trust for estate planning and create a will separate for other purposes such as where you wish to be buried. Also a trust cannot be created if the grantor does not have assets including financial products.

Name Mkama M. Kalebu

Position Managing Partner and Intellectual property Consultant

Company ENDO & Co. Advocates

E-Mail: Mkama.kalebu@ndowoadvocates.co.tz

Whatsapp: +255 657577055