What are the disadvantages of a trust?
Setting Up Costs
Documentation needs to be done through a solicitor. By the time you have discussed with the solicitor the particulars you might want, the cost is likely to be in the region of about $1,500.00.
Property Transfer Costs
If assets such as land are to be transferred to the Trust then there will be additional costs for that land transfer. The amount of these will vary from case to case. Naturally the cost of transferring a farm to the Trust will be greater than the cost of transferring a small beach property.
Because the Trust is a separate legal entity it will need to have separate tax returns and accounts prepared. In a simple trust this may be able to be carried out by the trustees, but in any event it is an additional burden. There will need to be (at least) a minuted annual meeting of the Trust and a minute book kept. Most professionals or organisations acting as independent trustees will make an annual administration charge in connection with their services.
Loss of Control of Assets
Once transferred to the Trust the assets no longer belong to the Settlor. This is important. If your own affairs fall into difficulty you cannot just take the money out of the Trust for your own purposes.
Nor can you necessarily rely on the trustees to be prepared to apply the Trust Funds towards for instance a risky business venture which you want to put all your family assets into.