Define: Support Trust

A support trust is a legal arrangement where assets are held in trust for the benefit of a specific individual or group of individuals, typically for their financial support or well-being.

A support trust is established by a grantor who transfers assets to a trustee, who then manages and distributes the assets according to the terms of the trust. The trustee has a fiduciary duty to act in the best interests of the beneficiaries.

The beneficiaries of a support trust can be individuals, such as family members or dependents, or a specific group of individuals, such as employees of a company or members of a charitable organisation.

In most cases, a support trust can be modified or revoked by the grantor as long as they are still alive and have the legal capacity to make such changes. However, once the grantor passes away, the trust becomes irrevocable.

If a beneficiary of a support trust passes away, the trust document should specify what happens to the remaining assets. It may provide for the assets to be distributed to other named beneficiaries or to a charitable organisation.

In some cases, a properly structured support trust can provide some level of asset protection from creditors. However, the effectiveness of asset protection will depend on various factors, including the jurisdiction and specific circumstances.

Yes, there can be tax implications associated with a support trust. The trust may be subject to income tax on any earnings generated by the trust assets, and beneficiaries may also be subject to income tax on distributions they receive.

Yes, a support trust can be used as part of an estate plan to ensure that assets are managed and distributed according to the grantor’s wishes. It can also help minimize estate taxes and provide for the financial needs of loved ones.

The trustee of a support trust has various responsibilities, including managing the trust assets, making distributions to beneficiaries as specified in the trust document, keeping accurate records, and acting in the best interests of the beneficiaries.

Yes, a support trust can be contested in court if there are valid grounds for doing so, such as allegations of fraud, undue influence, or lack of capacity on the part of the grantor. However, contesting a trust can be a complex and costly legal process.