When you don’t trust a beneficiary, use a trust

By Stephanie Battista ( September 4, 2020, 1:54 PM EDT) -- Setting up a trust during your lifetime — referred to as an inter vivos trust — is an attractive tool for those who are looking to reduce their overall tax bill. Trusts can offer income-splitting advantages by allocating the trust assets’ income and capital gains to the hands of a beneficiary with a lower tax rate. Trusts can also drastically minimize one’s exposure to probate tax upon death. An asset that is held in trust on the date of death of the settlor would not be subject to probate tax (or estate administration tax in Ontario). In Ontario, the current rate is approximately 1.5 per cent, so this probate tax can get quite high depending on the value of the estate....