Here are some of the benefits you may enjoy by having a trust.

1. Saving taxes
You can save on taxes by having a trust, For example, it’s possible to split income with lower-income beneficiaries by allocating income of the trust to those beneficiaries to be taxed at their lower rates (though there are some exceptions). In addition, testamentary trusts, created in your will upon your death also offer these graduated tax rates but only for the first three years following your death, after which the trust will be subject to the highest marginal tax rate, causing the tax benefits to disappear.

2. Tax exemptions
It’s possible to use a trust to access the lifetime capital gains exemption (LCGE) or the principal residence exemption (PRE), even where it would otherwise be impractical to do so. For example, if a trust owns shares of a qualifying small business corporation, it may be possible to utilize the $971,190 LCGE of each beneficiary. Similarly, if a trust owns a residence, it may be possible to shelter a sale from tax using the PRE, as long as at least one beneficiary ordinarily inhabits the home.

3. Protecting assets
If you want to protect assets from creditors, marriage breakdown or from those who might influence your beneficiaries, a trust can be an effective vehicle. Be aware that there is “fraudulent conveyance” legislation that could prevent you from transferring assets to a trust to avoid claims in some cases – speak to a lawyer about it.

4. Charity trusts
A trust can be set up with the purpose of providing gifts to charity.

5. Providing privacy & avoiding probate
After your death, your will is likely to be probated. In this case, your will becomes a public document, along with the value of the assets that formed your estate. Further, certain people may be entitled by law to receive a copy of your will. A trust agreement, however, is a private document and can keep information confidential. Some people replace their wills with a trust. Also assets held in a trust fall outside of your estate and, therefore, do not require probate or the payment of probate fees.

6. Avoiding compulsory succession
If someone feels that they were treated unfairly in your will, a legal battle could ensue. In some cases, it may be possible for your will to be varied (changed) – called “compulsory succession.” A properly drafted trust can be watertight so that challenges to your wishes may be avoided.