How Family Trusts Help Prevent Estate Disputes?

Family trusts are arrangements where the ownership of assets is entrusted to a trustee, who manages the trust property according to the trust agreement and transfers the assets to designated beneficiaries under specified conditions. The assets that can be placed in a family trust are not limited to funds alone but can include real estate, business shares, or other forms of assets.

However, the idea of entrusting the management of hard-earned wealth to someone outside the family often makes many traditional Chinese individuals hesitant about the concept of family trusts. Instead, they tend to opt for a more direct approach, such as making a will. Although making a will is the most common practice, it often leads to family disputes and even depletes the family’s wealth due to issues surrounding the authenticity and validity of the will. Family businesses breaking apart due to conflicts are also common occurrences.

The distinguishing factor of family trusts is that once a trust relationship based on trust is established, the assets contained within the trust no longer legally belong to the original owner. In other words, the assets in the trust exist independently and are not held by the settlor. Therefore, even if something happens to the settlor, the existence of the assets remains unaffected. Thus, family trusts can prevent disputes within the family from arising.

If you have any questions about family trusts or need legal assistance in establishing a family trust, please contact us immediately. Our asset protection lawyers are more than happy to answer your legal inquiries and provide you with professional and effective strategies to protect your interests.

Source: 《Axis of Law》Season 1 – Episode 5 – Property Settlement – Trust

*Disclaimer: The above content is intended to provide general legal knowledge and should not be considered as a specific response to your individual issue. The law is complex, and we strongly recommend seeking professional legal advice. Canaan Law Firm will not be held liable for any loss or damage caused by the information contained or omitted in the above content.