Trusts are popular among 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. A trust may be establish in the will (a testamentary trust) or while the owner of the assets is still alive (an inter-vivos trust).The person, who establishes a trust is called the settlor, and he or she appoints trustees, who then will become the legal titleholder of any assets transferred into a trust.
A person can have a will (with trusts established by the will) along with one or more trusts inter-vivos trusts. The will takes effect upon the individual's death. The inter vivos trust takes effect when the documents establishing the trust (trust indentures) are created and executed.
A revocable trust could be dissolved by the settlor at any time (provided he or she is mentally competent). Irrevocable is the trust that cannot be dissolved by its settlor.
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 that is submitted to the Court along with the probate application (application for the certificate of the estate trustee).
Property transferred into a trust will be transferred out of the settlor's control to the trustee, who will then control the assets. Property disposed by a will remains under the supervision of the testator, for as long as the testator is still alive.
The most common use of the trusts is to keep the funds for young beneficiaries, who are not sufficiently mature to handle money. A monetary gift in a will would be handed over as a lump sum, but when a trust is created by the will, it can control incremental payments until the beneficiary attains the age specified in the trust document.
A settlor establishing a trust for a young beneficiary has 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