Although the common perception is that trusts exist only for the very wealthy, they primarily exist to permit people to share their wealth and save on taxes, says Brian Cohen, a partner with Borden Ladner Gervais LLP’s Toronto office who practises in the areas of wealth management, personal taxation, succession planning and trusts.

'Suppose you gave a family member $1,000 and they invested it,' says Cohen. 'You’d be responsible for the taxes on any income they made on that, and if you’re already in the top bracket, you’re looking at paying 46 cents on every dollar.'

But, Cohen says, when money is put into a trust, the system runs in a different manner.

'For tax purposes, trusts are treated as individuals and are taxed only on their income,' says Cohen. 'So, the trust pays taxes on its income at what’s most likely a marginal rate – like about 17 per cent – instead of that being put upon your income, which is going to be taxed at a much higher rate.'