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Trusts are non-essential but valuable tools in estate planning

Many Ontario residents think they only need to draft wills later in life. The truth is that life is unpredictable, and as soon as a person starts earning an income, it is wise to establish some form of estate planning that can be adapted through the years as assets increase and major changes like marriage and children occur. Those who do consider estate planning may misguidedly believe that trusts are essential, while the fact is that they can be helpful under particular circumstances, but they are optional.

The most popular type of trust to establish is a living or revocable trust. It allows the person to put his or her assets into the trust for use until his or her death, at which time the assets are transferred directly to the beneficiaries of the trust -- bypassing probate that will typically apply to a will. Another advantage of a trust compared to a will is the privacy and confidentiality because it does not become public record, which is the case with a will.

Trusts can also be valuable tools to protect assets for children from a previous marriage when a person enters into a second or subsequent marriage. An example of the advantage of a trust is when the person dies; the trust can provide for a surviving spouse and, upon that spouse's death, the remaining assets can provide for the children from the previous marriage. These are but some of the benefits trusts can have for ordinary citizens with average lifestyles.

When it comes to high-asset Ontario residents with complicated estates, there are many situations where the effective use of different types of trusts can be beneficial. Regardless of the complexity of a person's finances, the advocacy and guidance of an experienced estate planning lawyer can be helpful. With the advice of such a professional, a person can make informed decisions about providing for surviving loved ones upon his or her death.

Source: nvestopedia.com, "When Does the Benefit of a Trust Outweigh the Cost?", Bob Rall, Accessed on June 23, 2017

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