Gift Trust
A gift trust, also known as a gift inter vivos trust or a lifetime gift trust, is a type of irrevocable trust that allows an individual to make gifts of assets to the trust during their lifetime while retaining some control over the assets.
The main objective of a gift trust is to transfer assets out of an individual's estate, which can help to reduce the potential inheritance tax liability. Once the assets are transferred to the trust, they are no longer owned by the individual and are held for the benefit of the trust beneficiaries.
are no longer owned by the individual and are held for the benefit of the trust beneficiaries. The individual who sets up the gift trust (the settlor) can specify the terms of the trust, including the beneficiaries, the assets that will be transferred, and any restrictions on how the assets can be used. The settlor can also appoint trustees to manage the trust and make decisions regarding the distribution of assets to the beneficiaries.
The beneficiaries of a gift trust can include family members, friends, or charitable organizations. The trust can be structured in such a way that the beneficiaries receive regular distributions of income from the trust, or that the assets are held in the trust until a specified date or event.One of the benefits of a gift trust is that it can allow the settlor to retain some control over the assets, such as the ability to veto distributions or to replace the trustees
Additionally, the transfer of assets to the trust can occur during the settlor's lifetime, which can help to avoid the potential delays and costs associated with probate.
However, it's important to note that a gift trust is irrevocable, meaning that once the assets are transferred to the trust, the settlor cannot change their mind and reclaim them. Additionally, there may be tax implications associated with setting up a gift trust, so it's important to seek professional advice before making any decisions.
