Trusts can be a useful and flexible tool, allowing you to manage your assets in a way that best suits your needs. The person who creates the trust (the Settlor) appoints a Trustee to hold title to property on behalf of a Beneficiary. The Trustee manages the property so that a Beneficiary may receive the income generated from the property or the capital (or both).

A Testamentary Trust is created through a will and comes into effect upon the Settlor’s death. It can be used for various reasons. Some common uses of testamentary trusts include:

  • For minor children, a trust can ensure payments are made after the children reach a certain age and/or meet certain conditions. Payments can also be made only from the income generated from the capital, or from some of the capital itself.
  • For spouses, a trust can provide income where there are children from a previous marriage. A trust can also set guidelines for payments if the spouse is ill or lacks capacity.
  • For beneficiaries receiving disability benefits, a trust can arrange for payments that will maximize government benefits.
  • A family trust can also be arranged to help the family income split and achieve tax savings.

An Inter-Vivos Trust is created and takes effect while the Settlor is alive (also called a Living Trust). A will is not required. Trusts are a flexible tool and completely confidential. For these reasons, among others, establishing a trust can lead to significant benefits during a person’s lifetime and when estate planning.

One type of inter-vivos trust includes a family trust, which helps family members split income and achieve tax savings. Another type of inter-vivos trust includes an “alter ego trust” or a “joint partner trust” for individuals aged 65 and over. An alter ego trust or joint partner trust allows a single individual or a spousal couple to roll property that has appreciated in value into the trust and defer any taxes owed.

In addition to the tax savings, an inter-vivos trust can help eliminate or reduce probate fees upon death, as well as protect assets from creditors or from claimants under the Wills Variation Act.

Contact Jiwa Law Corporation for a consultation with our experienced estate planning lawyers. We will work closely with you to strategize a plan to protect and maximize the value of your assets.

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