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Wills and trusts in estate planning

Trusts are becoming more and more popular by Ontario residents who want more control over what happens to their assets, both during their lifetimes and after their deaths. While a will is an essential estate planning tool, trusts can be used as added methods of control. The person who establishes a trust is called the settlor, and he or she appoints trustees who will become the legal titleholder of any assets transferred into a trust.

Although a person can have a will along with one or more trusts, the manner in which the two tools handle assets are poles apart. While a will takes effect upon the individual's death, the creation of a trust activates it; however, it could be dissolved by the settlor at any time -- provided he or she is mentally competent. One of the primary benefits of a trust is that it will bypass probate, saving money and time while also providing privacy, because it will not be publicly accessible as is the case with a will.

Property transferred into a trust will be under the trustee's control while property in a will remains under the supervision of the testator, and transferring funds into a trust can have several tax benefits. A monetary gift in a will is handed over as a lump sum, but a trust can control incremental payments if, for example, the beneficiary is young. A settlor can also have more control over conditional allocations, such as determining that a beneficiary must receive the money at a certain age or upon reaching a specific goal.

Including trusts in an estate plan can provide significant benefits if such plans are properly researched before execution. For maximum benefits, some Ontario residents choose to use the skills of an experienced estate planning lawyer who can assess their circumstances, goals and wishes before explaining the potential options. That will allow the individual to make informed choices about how his or her estate planning must be executed to provide maximum benefits.

Source: FindLaw Canada, "How is a trust different from a will?", Accessed on June 17, 2017

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