Estate Trusts Lawyers for Families in Calgary
Estate trusts are an important element of estate planning for people looking to protect assets both while they are alive and when they pass away.
Along with wills and powers of attorney, trusts are the most-requested estate planning tool that we are asked to assist with at Spectrum Family Law in Calgary.
This is because trusts can be complex to consider. The setup process must be managed in the right way to ensure that the estate trust you create accurately reflects your wishes.
If set up correctly, trust funds can not only pass on assets to beneficiaries effectively. They can help you maintain control over how and when your assets are distributed, potentially minimize taxes for heirs, and bypass probate.
What is an estate trust?
By setting up an estate trust, you appoint a “trustee” to take ownership of title to property or assets while you are still living or after you pass away.
Assets held in a trust may include cash, investments, real estate, life insurance policies, and so on.
The trustee can hold and/or manage these assets for an intended beneficiary and distribute them according to the instructions outlined in the trust deed you create.
If, for example, you want to pass assets to a minor or dependent child after you die, a trust can help you do that.
The trustee will look after the assets placed in the trust until the date nominated by you for the transfer of assets. This might be when the child reaches the age of 18. At this point, the trustee is responsible for passing the assets to the beneficiary according to your stated schedule.
If the assets placed in the trust need to be managed (e.g., certain investments) the trustee can arrange this. It is an important role that requires careful consideration before a person is appointed.
What types of trusts are there in Calgary?
Most individuals considering a trust must first make a simple choice between setting up a living trust or a testamentary trust. There are fundamental differences between the two:
- Testamentary trust – this enables you to pass on assets after you die. It is set up within your will and can be changed at any time providing you have the mental capacity to do so. These assets are considered part of your estate and are subject to taxes/estate fees.
- Living trust – also known as an “inter vivos” trust, it enables you to transfer assets while you are still alive. It may have some tax, cost, and other advantages for beneficiaries (see next section). You can set up a living trust without the need to go to court and assets placed in the trust can be changed at any time.
Within these two broad categories, there are many different types of trusts – too many to cover here.
So, once you decide on your main goals with transferring assets to loved ones, it is time to sit down with an estate trust lawyer and select the best type of trust to help you achieve what you want.
Why consider a living trust in Alberta?
You need not have a large estate to consider setting up a trust, though they are a popular tool for high net-worth individuals to employ.
Think of trusts as cost-effective ways to pass on assets, while keeping asset values private and reducing the chances of estate litigation.
Following are some good reasons to consider setting up a trust…
Reduce estate taxes
When someone dies in Calgary, a large chunk of the estate can be eaten up by estate taxes. So, your intended beneficiaries may get less and the state gets more. While spouses are exempt from paying estate taxes on assets in a revocable living trust, children are not.
Probate is a court process by which a will is validated. When someone dies, this process delays the transfer of assets until confirmed by the court. Trusts do not need to pass through probate as they are already considered to have been legally validated.
Keep assets in the family
A living trust allows you to pass assets reliably to family members. Sometimes, a non-relative, such as a son-in-law, can inherit property even if it is against your intended wishes. A trust will help prevent that.
Parents who have children later in life or suffer a serious accident or illness may not live to see their child reach maturity. In such cases, a living trust can help you protect and pass assets to the child at a later date – you maintain control of how and when your child receives the assets.
Trusts keep the value of your assets private – unlike the contents of a will, which are a matter of public record.
Avoid assets being “spoiled”
Many people pass assets to loved ones via a will with the best of intentions – only for these assets to be “spoiled” or wasted. Many reasons can cause loved ones to use assets unwisely – from making poor investment decisions due to financial “illiteracy” to supporting a drug habit.
Manage your assets if you lose capacity
A living trust can also help you plan for if you lose mental capacity in the future. Decide how to manage and distribute assets now while you can – even if you have many years of life ahead. This is even more important if you have no children or a power of attorney set up.
How can our trust fund lawyers help you?
Trusts are relatively simple to set up for people who know what they are doing but they require considerable thought and reflection before making decisions.
There are so many different types of trusts – all achieving different purposes. Confusion is common and mistakes can be very costly.
Our trust fund lawyers firstly seek to understand your estate planning goals. Trusts are only one part of a comprehensive estate plan to protect loved ones, after all.
Then we will help you identify the right type of trust, complete the documentation, and ensure that your documents are valid according to Alberta law.
How will we set up your estate trust?
If you set up a testamentary trust, you will need to write or rewrite a will to cover the terms and conditions of the trust.
It should specify:
- The assets held in the trust
- The beneficiaries
- The trustee(s) and their respective powers
- The duration of the trust
- How the assets will be distributed to beneficiaries
If you decide on a living trust, we will follow these basic steps:
- You need to name the trustee and beneficiaries in the trust agreement, including relevant terms and conditions, and clauses
- Open a bank account in the name of the trust with the relevant financial institution(s)
- Coordinate the legal transfer of assets to the trust
Do you need a lawyer to set up a trust in Calgary?
A lawyer is not a legal requirement for setting up a trust. However, few people attempt to navigate the process without at least some legal assistance.
You will find the help of one of our estate trusts lawyers invaluable in handling the paperwork, record-keeping requirements, and tax implications of trusts.
Also, your lawyer will understand your wider estate planning goals and ensure that the trust is set up in such a way that it meets the requirements of these longer-term goals.
Make a trust part of your estate plan in Calgary
An estate planning lawyer at Spectrum Family Law in Calgary is ready to listen to your goals and advise you of your options for setting up a trust during a free case evaluation.