There used to be a perception that only extremely wealthy people set up trusts, but the reality is that a trust does not have to be large to be effective. Some trusts hold millions of dollars; others are much smaller.
When setting up a trust, the key is to choose the right kind and to customize it to meet your and your family's needs. The terms of the trust can be as specific or as general as you like. Here let's discuss some of the benefits of setting up a family trust.
One good reason to create a trust is that it can minimize probate fees and estate taxes. For example, a trust can be used to transfer taxable income out of your ownership and into the hands of a family member who is taxed at a lower rate. The trust can also be used to keep assets out of probate.
If your goal is to provide for a spouse, a minor child or a family member with a disability, then setting up a family trust may be the best option. The terms and conditions of the trust can specify how and when the money is distributed -- for example, monthly payments might start when a grandchild turns 21. You can also appoint a trustee to manage and pay out the funds.
Additionally, a trust can be used to provide for a loved one with a disability without putting at risk his or her eligibility for benefits through the Ontario Disability Support Plan.
At Hagel Lawfirm, we help our clients choose cost-effective trusts that are appropriate for beneficiaries. We also help trustees understand and carry out their duties, such as accounting, reporting to beneficiaries and navigating the Court process of passing accounts.
Please see our Trust Administration overview to learn more.