A trust is a legal tool by which assets are held for the benefit of specified beneficiaries; it can be created outside of or within a will.
The Settlor, is the person who creates the trust; the Trustees are persons appointed by the Settlor to manage and control the trust; and the Beneficiaries are those named to receive income, or capital (or both) from the trust. In B.C., trusts can provide multiple benefits, below are a few examples: Inter-Vivos Trusts are created during the lifetime of the settlor, and can be used for:
- paying income to beneficiaries in a lower tax bracket, providing the flexibility of income splitting;
- reducing or avoiding probate fees when the settlor passes;
- the determination of how and to whom the trust assets will be distributed;
- assist in a corporate re-organization and succession planning; and
- for those over 65 years of age, an āalter ego trustsā and ājoint partner trustsā can provide the benefits of tax deferral and the reduction of estate administration and probate fees.
Testamentary Trusts are trusts created in a will and come into effect upon the will-makerās death, such trusts can assist with:
- planning for blended families;
- creating discretionary payments to manage young, or spendthrift beneficiaries;
- making fixed or discretionary payments to beneficiaries upon certain conditions; and
- providing for beneficiaries with disabilities, in addition to current disability benefits;
Depending on your overall estate plan and tax considerations, a trust may be a useful estate planning tool to consider.
Trust and Estate Law
LK Law – Langley Law Firm