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.
Trusts are one of the most popular and useful tool in the estate planning.
A trust allows the settlor (who is the person creating a trust with his or her funds) to put his or her assets into the hands of the trustee but continue to use them until his or her death, at which time the assets are transferred directly to the beneficiaries of the trust. The transfer to the beneficiaries bypasses probate that will typically apply to a will. Another advantage of a trust compared to a will is the privacy and confidentiality because the trust indenture (the document creating the trust) does not become a public document, which is the case with a will that gets submitted for probate.
Trusts can be valuable tools to protect assets for children from a previous marriage when a person enters into a second or subsequent marriage.
The trust can provide for a surviving spouse during his or her lifetime and, upon that spouse's death, the remaining assets can be paid out the children from the previous marriage.
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