What is a Beneficiary Trust & Why you need one now?

People often ignore and overlook a few crucial financial aspects and usually need a compelling external stimulus before they act on them. 

Such elements typically are;

1. Life & Critical Illness Insurance
2. Estate Planning
3. Emergency Savings

These aspects are easy to ignore. You might not feel their need until you really need them, and if you don't have them in place, then it is too late. 

It is better to proactively understand the scope and benefits of the above aspects and have them in place to protect yourself and your family from a financial disaster.

In this article, we will discuss Estate Planning through Beneficiary Trusts. You can also learn about the other aspects in detail by clicking the links to visit the relevant blog post.

What is Estate Planning?

In simple words, estate planning is deciding in advance and putting in writing who and when they should inherit a part or the whole of your estate. 

Your estate is the net of all movable and immovable assets and liabilities at the time of death. It includes cash, bank balances, real estate, digital assets, investments, royalties, business interests, and possessions. Whatever you owe to others and the state at the time of death is paid out of your estate. 

People who receive these assets are called beneficiaries, and people who ensure that your wishes are carried out as expressed in your estate plan are called the executors. 

Depending on the scope of your estate plan, there could be other roles involved in estate planning, like the Trustees, Agents, Lawyers, Guardians, etc.

Estate Planning Tools

An expat's estate plan must comply with the legal and tax regulations of two or more countries. Hence it may involve a few tools like;

1. Will
2. Trusts
   1. Revocable Living Trust
      1. Beneficiary Trust 
   2. Irrevocable Living Trust
   3. Special Needs Trust
   4. Charitable Trust 
3. Power of Attorney
4. Life Insurance
5. Prenuptial and Postnuptial Agreements: 

What is a Beneficiary Trust?

A Beneficiary Trust is a vehicle created to seamlessly transfer your assets to individuals and/or entities on death. 

The beneficiary trust is a type of Revocable Living Trust which allows the amendment of the beneficiaries and their shares without their permission. 

Its scope is limited to the transfer of wealth only, and it may not protect the assets from creditors, government, and other individuals or entities with legal rights over your assets/estate.

The following are the roles involved in a beneficiary trust;

1. Beneficiary - A person(s) or entity(ies) designated to receive the assets in the trust. 
2. Owner - The person who owns the assets, creates and manages the trust until their death.
3. Trustee - A person with a fiduciary duty to manage the trust's assets in the best interests of beneficiaries and ensure the seamless distribution of the assets as per the direction of the owner.

There can be multiple beneficiaries and trustees associated with a single trust. Each beneficiary will have designated shares or interests in the trust's assets.

Why create a Beneficiary Trust?

A beneficiary trust is a simple and cost-efficient way to ensure a seamless transfer of wealth to your loved ones upon your death.

It helps them avoid legal hassles, Will probate, and ambiguity on who should inherit how much. It also helps them easily navigate complex inheritance laws, especially involving multiple jurisdictions.

A beneficiary trust can be particularly helpful for expats and residents in the UAE/Gulf. Especially the large Muslim population, which has restrictions on how much of their wealth can be transferred according to their wishes. 

How to create a Beneficiary Trust in the UAE?

When you open a Wealth Account with Ardan International, it comes with a Beneficiary Trust. You can place all your liquid assets like Cash, Bank Deposits, Stocks, Mutual Funds, Bonds, ETFs, and Structured Products under the trust. 

You can appoint a Trustee and Beneficiary to ensure the seamless transfer of your wealth after you.

You are in complete control of your account as long as you are alive. It comes into force after you to ensure that the assets are transferred to chosen beneficiaries without legal and succession challenges.

Click here to learn more about the Ardan Wealth Platform.

Connect with me on a quick Zoom call to understand how a Wealth Platform with a Beneficiary trust can help you grow, protect, and transfer wealth.

Click here to schedule our Discovery Call.