Why should a trust be set up? | ScriptaLegal
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Frequently asked questions > Company > Trust > Why should a trust be set up?

Why should a trust be set up?

  • Property transferred in the autonomos and distinct trust patrimony is no longer owned by the natural person (individual) who transferred them and, therefore, becomes secure from potential creditors of said individual, meaning that it cannot be seized by said creditors. Hence, such property is well protected from economic or lawsuit risks, as well as family conflicts such as divorce or separation.
  • The trust allows the potential inclusion of a child in the family business to ensure a smooth succession. All the children can be named as beneficiaries of a trust that holds the shares of the business and it may later be determined which child will be able and will have the skills to take over the business.
  • In terms of tax benefits, the trust allows to split the generated income among the beneficiaries, especially with adult children or a spouse with low income tax rates. It also allows, upon the possible sale of the business, to benefit from a capital gain exemption by each beneficiary and thus substantially lower the overall tax burden. The tax payable upon death may also be reduced.
  • The trust may allow to avoid certain formalities relating to tutorship/guardianship or curatorship.
  • The trust can also protect and provide income for a disabled person.

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