What is a family trust?

Family trusts are a valuable estate planning and wealth management tool. Families and individuals often utilize these trusts to ensure that wealth is passed to the next generation efficiently. This video outlines some of the reasons why you may want to consider one.

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Video transcript

Family trusts can be set up by an individual or family who has specific needs and goals when it comes to transferring their wealth. Here are some of the main reasons why someone may choose to create a family trust.

Estate planning

A family trust can help distribute assets according to the grantor’s wishes after their death. This can help minimize probate fees, minimizing taxes by taking advantage of certain tax exemptions and deductions. A family trust can be used to lower taxes.

Protecting assets

Assets are held in a family trust on behalf of its beneficiaries, shielding them from any claims that creditors might make against the individuals. 

Managing assets

A family trust can be used to manage assets for beneficiaries who may not have the skills or knowledge to do so themselves.

Providing for beneficiaries

Beneficiaries, such as children or grandchildren can receive ongoing financial support through a family trust. 

How to know if a family trust is a good fit

It’s important to know that setting up a family trust can be a complex process and may not be necessary or suitable for everyone. The specific laws and regulations regarding family trusts in Canada can also vary by province, so it’s important to ensure that any trust established complies with local laws and regulations. It’s essential to consult with a professional to determine if a family trust is the right choice for your unique circumstances.