A trust is a legal entity created by you and administered by a trustee (who holds legal title to the property of the trust) for the benefit of your beneficiaries. Inter vivos trusts are trusts created during your lifetime. Trusts created after death, through the use of wills for example, are called testamentary trusts. The use of trusts in estate planning is popular due to a number of significant tax planning opportunities. However, trusts are also excellent estate planning tools aside from these tax benefits.
the ability to continue to control assets that have been set aside for your children or other dependents;
tremendous flexibility with respect to how the trust operates;
a lack of restrictive legislation provided that the trust is properly set up;
the ability to keep your affairs confidential since trusts have few reporting requirements;
the possibility of protecting assets from creditors; and,
the ability to remove assets from your estate and therefore, from the calculation of probate fees.
The use of trusts in an estate plan requires the help of financial and legal advisors. A trust may not be appropriate in every situation and it is possible that the use of a trust may have adverse tax consequences.
For more information on both tax and non-tax advantages and disadvantages of using trusts in your estate plan,contact us for a Manulife Financial representative in your area.