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Trust is an important tool in estate planning. It is a mechanism to separate the power...

Trust is an important tool in estate planning. It is a mechanism to separate the power of execution over a property from the beneficial owner of a property. Critically analyze the six advantages of trust.  

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Answer #1

Answer: Trust- It is a fiduciary relationship in which a trustor gives the right to trustee to hold title to a property or asset for the benefit of third party. Trustor gives legal responsibility of his assets to the trustee. A trust is created by a Trustor with his lawyer. It determines how a trustor's money and property should be managed if he is alive or dead.

Advantages of a Trust- Are as following:

  1. Trust is a legal entity and assets are safer in the trust as it provides legal protection to assets.
  2. Trust also helps in minimizing the taxes and it can you a hassel free arrangement.
  3. Assets are distributed as per the wishes of the trustor so it minimizes the chance of fighting of property rights among children.
  4. Making a trust saves time and paper work also.
  5. A well managed and administered trust saves tax for the family.
  6. Trust can also be used for Estate planning and tax planning.
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