Paper family on wooden table and persons hands hold and protect them
Family Trusts can be a powerful tool for estate planning, tax planning, asset protection; and wealth transfer.
A family trust is a legal entity that holds assets for the benefit of a specific group of individuals, known as beneficiaries. The assets in the trust are managed by a trustee, who is responsible for making decisions about the assets and distributing income and capital to the beneficiaries. Trusts can be set up during an individual’s lifetime or through a will, and can have a wide range of uses, including:
- Protecting assets from creditors: Trust assets are generally protected from creditors in the event of a bankruptcy or other legal action.
- Minimizing Taxes: Trusts can be used to minimize taxes on income and capital gains, as well as to plan for the transfer of assets to future generations.
- Managing assets for beneficiaries: Trusts can be used to manage assets for beneficiaries who are unable to manage themselves, such as minors or individuals with disabilities.
- Providing for specific needs: Trusts can be set up to provide for specific needs such as education, medical expenses, or other associated costs.
Trust = No Trust?
Kind of! It’s a neat little phrase that we use when describing trusts to our clients. In the event of a major life event, a trust can ensure the wishes of the individuals who set the trust up will be carried out in life, and in death. A trust can help ensure assets are distributed fairly and equitably, providing extra peace of mind.
While there are several types of planning sstrategies associated with trusts, there are two main types of trusts that can be used for planning purposes including:
- Testermantary trusts: These trusts are set up through a will and take effect after the death of the testator
- Inter Vivos Trusts: These trusts are set up during an individual’s lifetime.
One of the most important consdierations when setting up a family trust is choosing the right trustee. The trustee must be someone who is trustworthy, reliable, and capable of making sound decisions about the assets in the trust. Trustees can be in dividuals or professional organizations.
During the process of financial planning, an advisor will typically take into consideration the complexity of the scenario and whether or not a trust could be beneficial at some point. Its important to consult with a Saskatoon financial planner, Trust and Estate Practionioner, Trust Lawyer, and Accountant who specilizes in estate planning and trust law. These advisors can help you understand the legal requirements and implications of setting up a trust, and whether the benefits outweigh the cons.
