When it comes to estate and wealth planning, trusts are considered because of the tax advantages it brings. It is not subject to probate upon the death of the settlor, so it’s not subject to probate tax. However, that’s not the only advantage of having a trust.
Trusts can also help relieve personal issues within the family. If you have beneficiaries you don’t get along with, but you feel you have a moral obligation to ensure they are “provided for” should you pass on, then a trust will be the best option.
Why is a trust a good option for families with complicated relationships?
It’s More Private
Wills are a part of a public record once submitted to the court upon death, which means it becomes available to anyone who wishes to request a copy to review its contents. On the other hand, a trust is not subject to public viewing, which is perfect for those with complicated family dynamics.
It Saves You From Making Uncomfortable Decisions
Having a trust will make it easier for you to avoid uncomfortable decisions and hurt feelings, especially if you want particular beneficiaries to benefit more than others.
It Protects the Privacy of Your Assets
Aside from the privacy you get from a trust with respect to the beneficiaries, you also get privacy for your assets. When you set up a trust, you will not be entitled to disclose the value of your estate.
Additionally, a trust may protect your assets from litigation after death. For example, you have an angry beneficiary who is not satisfied with what they received. They may be tempted to challenge the validity of your will after your death based on lack of testamentary capacity or undue influence. Therefore, the beneficiary can hold up the estate administration.
With a trust, evidence supporting such arguments is more difficult to prove when a trust has been in place for many years before the death of the settlor.
It Can Protect Beneficiaries from Themselves
A discretionary trust gives the power to the trustees to decide if and when to make a payment to a beneficiary and how much. Let’s say a beneficiary has spendthrift tendencies and overspends or isn’t good at managing their finances. In this case, the trustees can stagger payments to the beneficiary by excluding them from distribution if there’s a possibility that the beneficiary will exhaust all assets.
It Can Protect Inheritance
For beneficiaries with creditors, a trust can protect their inheritance by adding a clause in the trust instrument that prevents a beneficiary from transferring their interest in the trust to a creditor.
Will a trust be beneficial for you? It is if you have complicated family dynamics. Instead of putting everything on a will, consider the benefits of having a trust instead. A trust can prevent any further complications in the future. Aside from that, there are a lot more important factors that make a trust attractive that will help you achieve your wishes for your estate plan based on your personal relationships.
If you’re considering creating a trust, get in touch with Ontario Wills. We are an Ottawa estate planning lawyer that will give you professional legal advice in all matters of estate planning in Ontario.