Selecting the right kind of Will & Trust
There are numerous options to consider when preparing a Will, from the straightforward to complex. Below is a brief summary of the main options available:
Wills & Trusts
- Multiple Wills: Multiple wills may be used to reduce Estate Administration Tax, where assets may be administered without obtaining a Certificate of Appointment of Estate Trustee.
- Family trusts: These are trusts established to spread wealth amongst family members, for tax planning purposes.
- Testamentary trusts: These trusts are created within a will. They take effect only upon death of the settlor (person who creates the trust).
- Charitable remainder trusts: These are trusts established to provide lifetime income for one beneficiary with the balance of the trust (the “residue”) paid to a designated charity.
- Insurance trusts: Such trusts deal with the proceeds of a life insurance policy.
- Special purpose trusts: These are trusts set up for a specific purpose, such as to protect a fund from a spendthrift beneficiary.
- Alter ego trusts: These are available to those over 65 years of age. The trust provides for only a settlor being the beneficiary during his or her lifetime. These trusts are an effective tax planning measure for some individuals.
- Cottage trusts: These trusts are established to maintain a recreational property across generations and amongst members of a potentially extended family.
- Inter vivos trusts: These are created and in effect during the lifetime of the settlor. These are contrasted with testamentary trusts (see above) that only take effect upon the death of the settlor.
- Henson Trust: These are fully discretionary trusts, established to prevent a disabled beneficiary from losing entitlement to provincial disability benefits as a result of inheritance.
- Spousal Trust: These are ones where two spouses are the beneficiaries. They allow for the tax-deferred transfer of certain types of assets upon the death of the first of the two spouses.
When should a trust be used?
Unlike outright distribution, a trust provides that all or part of your estate be held in trust and administered for the benefit of one or more beneficiaries. A trust can remain in force for a beneficiary's entire lifetime, or until that person reaches a certain age. A trust is often chosen in the following situations:
- When the interests and assets of minor children are involved
- When there are children from a previous marriage
- When control of over your assets is important
If you have a question about Wills & Trusts or would like to speak with one of our will & estates lawyers, please or call us on 613 563 7544.