Any man or woman living in Ontario who has accumulated even a modest estate should be thinking about what will happen to his or her assets after they have passed on. Wills are the most commonly used documents for this process. Less often considered are trusts, but sometimes trusts may be the best way to distribute certain kinds of assets. They are definitely worth looking at as part of any estate planning.
Simply put, a trust involves holding money in an account to be managed by a trustee as dictated by the person who established the trust, who is known as the settlor. It is a legally binding document, and can be used to direct money in specific directions. A trust is an excellent way to pass along cash assets.
One of the best things about a trust is that it allows for money to be passed along before the settlor passes away. Some people may enjoy having the chance to see their heirs benefit from their gift. At the same time, a trust can ensure that money is spent on what the settlor had in mind for the recipient. A perfect example is a trust set up to pay tuition fees for a grandchild: the trustee can be directed to only release enough money to pay the school at the appropriate times, thus preventing misuse of the money.
Assets left in trust are also exempt from probate tax should the settlor die before they are all distributed. And yes, assets other than money can be held in trust, including homes and property. This can be used to ensure fair distribution of large assets, and prevent them from being sold.
A trust is a versatile tool and may be of interest to any person with assets, not just the very wealthy. Estate planning can be a complicated process, but it is a worthwhile one for most people. In order to make things less confusing, however, it might be good to speak with a lawyer who is very familiar with Ontario estate law. He or she may be able to help an individual develop a sound and secure plan for the future.