What are the disadvantages of a private trust?
Establishing a private trust offers estate planning and asset protection benefits, but it introduces several administrative and financial disadvantages. Setting up a trust requires complex legal drafting and professional advisory fees, which can be costly upfront. Ongoing operational burdens include meticulous asset management, strict record-keeping, and the requirement to file separate annual fiduciary tax returns. Furthermore, transferring assets into a trust can result in the loss of direct personal control over those properties, and poor trustee selection can lead to internal family disputes, administrative mismanagement, or legal challenges regarding breach of fiduciary duties.
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