There are several components of a concrete estate plan, and every working adult should have one. While you may want to use online services for DIY estate planning, it is often not the most effective solution, especially if you have significant assets. One of the key choices is to create a family trust, which can help protect your assets and save on tax liability. Meet Trusts lawyers Litvack Dessureault LLP to know more about your situation, and for your help, here is an overview of creating a family trust in Canada.
What exactly is a family trust?
A family trust allows you to transfer your assets and enter into agreements and contracts with others. Once you place assets in the trust, they are no longer your personal property and, therefore, not subject to the probate process. The trust is designed for beneficiaries, and there are trustees who are assigned to manage the properties and wealth. When it comes to a family trust, the beneficiaries are usually family members, while the head of the family is typically the trustee. Besides family members, a financial advisor can be appointed as the trustee. The trust can choose to buy and sell assets and make investments like a separate entity.
Should you consider a family trust?
There are several benefits of having a family trust –
- Firstly, it helps reduce taxes payable after your death. The capital gains made by the trust are no longer subject to taxes. For many people, a family trust is the best way to keep taxes in check.
- With a trust, it is much easier to pass the wealth to the desired beneficiaries. You don’t have to worry about the will (you can have a Will), which would have to go through probate.
- The trust also protects the assets, which means creditors and third parties cannot make claims against the assets placed in the entity. For example, if a beneficiary owes money or loses a lawsuit, the law cannot use the trust properties to repay the creditors.
If you have minor children, a family trust ensures how the wealth would be used for their needs. The trustees can manage the trust for the children until they are adults. You can also make provisions for a family member with a disability. The transfer of assets is a smooth process, and there are limited concerns.
Talk to a trust lawyer to know if you can benefit from creating one.