You want to create an estate plan and protect your wealth and assets for your loved ones. It is never too early to start, and you can choose to change most documents as and when necessary. A family trust is an effective estate planning tool that is of extreme benefit to anyone with significant assets. Consider seeing a Trusts lawyer to know whether you can have the option in your estate plan. In this post, we take a look at the benefits of a family trust.
Minimize your tax burden
You can place your assets in a trust, following which these assets are no longer part of your patrimony. You are the settlor in this case, and the assets are given to beneficiaries and managed by trustees of your choice. The tax system in Canada allows you to save significant money, depending on how effectively you create an estate plan. Please note that income splitting is not always possible, and therefore, you need to talk to an expert, preferably an estate planning lawyer, to evaluate the pros and cons.
Reduce taxes at the time of death
Because the assets belong to the trust, any capital gains are not subject to taxes. For instance, if you transfer your shares to a trust, the increase in value will not be taxable as per the laws. The trust, however, will have to pay taxes when the trustees decide to dispose of the shares. For wealthy individuals, a family trust is a great way to protect assets, which don’t have to go through probate. The probate process is expensive and lengthy.
Pass wealth effectively according to your wishes
You will not have difficulty in transferring assets to your family members through a trust. The trust laws allow you to decide how the money and assets would be used, and you can have a say on how wealth is utilized after your death. If you have minor children, you can ensure they inherit your estate assets without handing over everything immediately.
Protect wealth from creditors
If you transfer your properties, real estate investments, and other assets into a trust, you don’t have to worry about direct lawsuits from creditors. If you file for bankruptcy, the assets in the trust cannot be used to repay the creditors. However, just because you are in a bad financial shape doesn’t mean you can get away with creating a trust. If you do so, the judge may still allow seizing the trust assets.
Call a trust lawyer now!
