Does estate planning always require a trust?
Setting up a trust can be a valuable estate-planning tool. It may provide privacy, continued control over assets, customized estate distribution, and the ability for certain assets to pass outside the probate process.
What many people may not realize is that a Segregated Fund can accomplish similar estate-planning objectives
One important difference is complexity and cost. A trust generally requires legal setup, ongoing administration fees, and the trustee's mandatory record-keeping and separate tax filings. A segregated fund contract can be much simpler: by naming a beneficiary under the insurance contract, proceeds may pass directly to the beneficiary upon death, where applicable.
A Trust can hold a broader range of assets and accommodate more sophisticated estate arrangements, while segregated funds are generally simpler and limited to financial assets.
Good estate planning isn't necessarily about choosing the most sophisticated format like a trust. Segregated funds meet most Canadian families' estate planning needs.
I put together this simple comparison to highlight some of the similarities and differences. Individual circumstances vary, and you should consider legal and tax advice as part of a comprehensive estate plan.
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