Many people hear about an economic and legal tool called trust. Few people, however, have an idea how this economic entity can be used and why and how it can be beneficial. This article considers the concept of a trust, describes in detail its structure and methods of creation, list the participants in legal relations in the field of trust legislation, analyze Oklahoma legislation applicable to trusts, and offers the best experts to deal with complicated legal and economic matters that you can assess if you run a simple online search for a term such as revocable trust oklahoma.
Why People Need a Trust
So, trust as comes from the meaning is where you entrust somebody with certain authorities. This is an organizational and legal structure through which a real owner transfers his/her property for management to an individual or a company in favor of a third party or parties.
The first mentions of trusts date back to the 11 century. Warriors leaving for the Crusades were transferring their land to a trust. Thus, they were trying to solve several problems:
- * secured their families: the manager pledged to support the family of the warrior, who gave his land into the management during the crusade;
- * kept their land in order and for its intended purpose;
- * protected the land from the encroachments of neighbors, which was one of the responsibilities of the manager.
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A notable development and proliferation of trusts, as a form of protection and organization of assets was observed under the monarchy type of rule. Princes, dukes, merchants and other citizens who had assets decided to transfer their property to the management of the church in order to protect it from possible transfer to the state treasury at the order of the monarch.
However, the church was in no hurry to return the property given under its management, a fact that prompted the development of the legal aspect of the trust legislation. Today, having gone through such a long history, trusts are one of the most advanced systems to organize and manage assets.
After having a detailed study of the trust as an economic entity, it becomes clear that the economic aspect in this case is not as important as the legal issues, in particular, the legal interaction among the participants and the legal obligations of the parties. They are of paramount importance when creating a trust.
Participants to the general structure of legal relations in a trust can be described as follows:
- - Trust settlor: an individual who transfers the property to the manager of the trust;
- - Trust manager or trustee: an individual or legal entity that disposes of the property included in the trust in the interests of the beneficiaries specified by the founder of the trust;
- - Beneficiary: an individual or legal entity who favors from the trust property.
Sometimes the fourth participant can be defined as the protector. S/he acts as a guarantor to ensure that the administrator manages the trust in the interests of its beneficiaries. Due to the fact that the property, in the classical version of a trust, cannot be revoked, there must be an individual or legal entity in place to protect interests of the trust founder and its beneficiaries from possible violation of the trust agreement on the part of the manager. If such violation is detected, the protector has the right to change the manager.
The main specific feature of the trust can be the ownership rights to the property transferred under the trust management. From the legal point of view, it belongs neither to the founder, since s/he loses the ownership at the time of property transfer to the manager, nor to the manager, since s/he only provides a trust management service, nor to the beneficiary, since he only receives the payments described in the foundation act of the trust. Thus, a trust, as an organizational and legal structure for managing assets, acts as a separate, independent entity and has ownership of the property transferred into the possession of the trust.
From the point of view of practical application of a trust as a financial instrument, there may be several options for its use. The following can be highlighted:
Let's discuss in more detail one of the trust goals - minimizing taxation. In most jurisdictions, trusts are exempt from paying annual taxes, with the exception of income tax, while withdrawing funds or paying remuneration to the manager. Most often, the manager will receive a percentage of the annual return on the trust assets. Also, using the trust legal form can significantly reduce taxation during the procedure of inheritance.
- * Protection of the trust founders' assets;
- * Protection of trust members from creditors;
- * Tax optimization;
- * Transfer of capital by inheritance without a will;
- * ensuring the confidentiality of property ownership;
- * Protection of the property / capital of the trust founder from misuse;
- * improving the efficiency of asset management;
It should be noted that depending on the conditions set forth while creating a trust, it can serve as a solution to a significant number of tasks:
It goes without saying that it would be vitally important to hire a professional lawyer or legal firm when a trust needs to be created. The Oklahoma Will and Trust (http://www.oklahomawillandtrust.com) offers its clients highest standards of service and full protection of your rights and property.
- * Package trust - used for confidential purchase of securities;
- * Corporate trust - used for the purpose of acquiring foreign companies or managing companies;
- * Protective trust - used to protect assets or in case of a conflict of shareholders;
- * Inheritance trust - created to ensure interests of heirs;
- * Charitable trust - to carry out activities aimed at financing charitable projects.