TRUSTS

While we prefer to keep your planning as simple as possible, in some cases, trusts are a vital part of your estate planning.  Here is some information about the types of trusts that are commonly used:

Testamentary Trusts

It may be recommended to include a trust in your Will to take effect after your death.  Here are some examples of when a trust is appropriate:

  • To protect children or grandchildren until they are mature enough to manage inheritance money properly
  • To provide a fully discretionary trust for a disabled beneficiary to help preserve their entitlement to social assistance benefits (“Henson” trust)
  • To fulfill your obligations to support your new spouse while still leaving an inheritance to your children from a previous relationship (spousal trust)
  • To protect a beneficiary who has health or financial difficulties
  • To retain control over funds left to beneficiaries after your death

 Alter Ego Trusts or Joint Partner Trusts 

In certain cases, alter ego or joint partner trusts may be considered as part of your planning.  These special trusts are set up during your lifetime to cause part of your estate to be distributed outside of your Will (to avoid probate).  You must be at least 65 years of age and a Canadian resident to establish this type of trust.  Assets transferred to the trust do not form part of your estate and therefore do not pass under your Will after you die meaning that no probate fees will be payable on these assets.  The trust terms must provide that you are the only beneficiary of the trust during your lifetime.  After your death, the trust assets will be distributed to your named beneficiaries in accordance with the terms you have set up in the trust (similar to provisions in your Will).  The trust can be set up so that you can maintain complete control over your assets.  It will also name an alternate trustee who will take over in the event you become incapable, or in any event after your death.  The value of your estate must be relatively significant to justify the expense of establishing this type of trust.