When drawing up a will, you may elect to create a trust to ensure that your funds are disbursed according to your wishes. A trustee is appointed to administer the trust, and funds can be put in the trust during your lifetime or upon your death, or a combination of both.
The trust as a tool in a will is valuable for its flexibility. A trust can be designed in a manner appropriate for almost any individual circumstance. It can:
- Hold a family member's share of your estate until the individual reaches an appropriate age
- Provide financial support to a beneficiary with special needs
- Provide for children from a previous marriage while providing for your current spouse
- Continue the education or support of a beneficiary
- Hold an important asset, such as a property or family business
- Reduce overall income taxes (as testamentary trusts pay taxes separately from graduated tax rates
- Continue charitable donations
- Protect assets from a beneficiary’s creditors or an ex-spouse
There are many different kinds of trusts that suit individual goals or objectives.
A spousal trust ensures that only a spouse is entitled to receive all the income during his or her lifetime. At their death, the remaining capital is passed to other beneficiaries (e.g. a charity or children from a previous marriage).
Accumulation trusts predetermine at what age and/or under what circumstances the deceased’s children may be able to make use of the income generated within the trust. In most cases these trusts are designed under circumstances in which the person believes the bequest may be at risk due to the child’s capacity to make responsible choices with an immediate inheritance.
A Henson trust helps a person protect children with disabilities. The trust can be structured to ensure that the child’s eligibility for federal and provincial disability benefits is not affected by the bequest in a will.
Created under the terms of a Will, typically for the benefit of a child (minor or not).
Enables you to continue your charitable donations after death.
Created by a person who is 65 years of age or older, this trust provides benefits only to the contributor during his or her lifetime.
A joint partner trust is the same as an Alter Ego trust, with the exception that it includes the contributor and his or her spouse as benefactors during their lifetime.