(Guest submission by Joseph Berljawsky, BSW, MSW, BCL & LL.B. www.BallLawFirm.com)
One of the major issues of estate planning is discussing and communicating plans to the next generation. Sometimes this is because the issue is taboo and sometimes it is because of worries that the next generation will not manage the money responsibly. It can also be due to the simple fact that a person has never thought about it at all. Creating a Trust is one way to solve these problems. It creates a forum to talk about next-generation wealth and estate planning and devise an actual plan so that wealth is managed in the manner you envision.
Here are some of the reasons you should trust the next generation with a Trust:
1) Help When it’s Needed and Watch People Enjoy
When you place money or property in a Trust (while living) you get to see where your succession is going and help people when they need it. This could be to help your kids buy their home or pay for your grandchildren’s education – and then enjoy seeing them benefit. Imagine eating dinner with your kids in their new home or watching your grandchild graduate and knowing that you helped make that happen…
2) Reduce Taxes
There is often a big tax advantage for Trusts. Having assets devolve in one shot to a beneficiary could trigger a very high tax rate. With a Trust, the beneficiaries can see the money devolve to them in smaller amounts at a lower tax rate or at a later date when their tax rate will be lower.
3) Avoid Conflict
Another reason to delineate how your money will be distributed in a Trust is to avoid any family conflicts after you pass away. If a Trust is set up and your descendants are involved, there will be absolutely no surprises when your time comes. This can help avoid most conflicts and ensure that your legacy is not mired in family disputes or even legal battles. Your family will simply be able to grieve without worrying about the financial details of your death.
Trusts are an extremely malleable instrument and are completely customizable. You can do whatever you want with them, so your imagination is the only limit (and a few legal formalities).
Another interesting feature of a Trust is that it keeps your assets secret. When you die your will becomes public and anyone can find out what assets you had and who got them. However, if you move your money into a Trust, these details remain private.
6) Help Future Generations
Finally, Trusts are among the very few ways to leave money to people who are not yet born. Usually a gift (such as in a will) requires the beneficiary to exist at the time of the bequest. With a Trust you can designate a class of people as beneficiaries. So, if want to leave money to your great grandchildren for school, but they are not born, this becomes possible through a Trust.