Testamentary Trust Lawyers In Calgary

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Testamentary Trusts: Protecting Nest Eggs

Most people understand that they need a will. There are many reasons why a person needs a will. One aspect of what a will can do is set up a testamentary trust. The Testamentary trust lawyers at Kahane Law Office in Calgary can help set up your in a will 403-225-8810.

What Is A Testamentary Trust?

A testamentary trust is a personal trust. Testamentary trust lawyers help people to set up their trust using their will. In some instances provincial legislation can also set up a testamentary trust, as can a court order that relates to a deceased person’s estate. Testamentary trusts are not created while a person is alive. While the terms are drafted in a will while a person is alive, the trust is not created until death. The trusts are set up to deal with assets in an estate for a prolonged period of time. For example the time it takes to distribute the assets of an estate are generally not considered to be held in a testamentary trust. A testamentary trust assigns certain assets to be held in trust for a person, a group of people or several different groups of people. The assets are managed for the beneficiary of the trust.

Why Do You Need A Testamentary Trust?

The types of situations that a testamentary trust is used for will be set out below. Generally a trust is used to help control or manage assets or income generated by the assets of an estate. Estates are the assets of a person who has passed away. Typically, testamentary trusts are used to delay or manage when beneficiaries get control over assets and may assign a third party to manage those assets before then. There may be tax advantages to a trust or other advantages with respect to government, pension or other benefits.

What Are Testamentary Trusts Used For?

A testamentary trust lawyer can review your situation and let you know how a testamentary trust is beneficial for you. Typically they are used in some of the following situations:

Testamentary Trusts for Minor Children:

This is the most common testamentary trust. By default, the testamentary trust lawyers at Kahane Law Office will include this in your will. There is no additional charge for setting these up. Even if your children are grown, it is good to include this type of trust as there may be the unfortunate situation where you become the guardian of grandchildren. The trusts for minor children not only set out who manages the assets of the trust, but at what age(s) the children will get access and control of the capital assets in the trust. Further, the trust for minor children will set out what the income of the trust can be used for.

Trusts Set Up For Disabled Adults:

Testamentary trusts set up for disabled adults are set up for several reasons. These reason include those for minor children. Many people also want to set up these trust for adults with disabilities so that they do not lose government financial assistance. Some government programs will stop benefits if a disabled person has assets over a certain amount. These are often referred to as Henson Trusts. These trusts are useful in many provinces in Canada but are not functional for his purpose in Alberta.

Spousal Trusts In Alberta:

People will set up for spouses for a number of reasons. The first may be that a spouse does not have the financial experience to manage the assets of the estate. These are usually set up in larger more complicated estates. In other situations, the spousal trust is set up to allow for the income from the estate (or even assets such as a home) to be paid to the spouse but the assets of the estate, on the death of the second spouse to be passed to children. This is often done in situations where there are second marriages with children from first marriages.

Trust Tax And Pension Benefits:

Testamentary trust lawyers understand the importance of the preservation of wealth. Trusts may be used to reduce taxes. While, as described below, this has changed in recent years, there are still tax benefits. Secondly, testamentary trusts can be used to preserve pension benefits owed to a deceased person.

Protection of Assets With A Trust:

Lastly, testamentary trusts can be used to preserve the assets of an estate. A testamentary trust lawyer can explain your options. This tool is often used in the following situations:

  • Where a beneficiary of an estate is bankrupt;
  • Whenever a beneficiary is in a relationship (or potential relationship) where assets may be claimed in a family or matrimonial law dispute; and lastly
  • Where a beneficiary is not financially responsible and would spend the assets of the estate quickly and frivolously.

How Testamentary Trusts Are Taxed In Alberta

Testamentary trust lawyers will help you understand the tax implications of testamentary trusts. Historically, testamentary trusts enjoyed a graduated tax rate. The Canadian government, in its 2014 budget has changed this rule. The tax implication and benefits of a testamentary trust will largely depend on the situation that you are setting the trust up for. Trusts for minor children will still be beneficial as the trust can essentially income split with the child or children. This means that the tax on the income derived from the assets of the estate is taxed at the tax rate of the person who receives it. It is important to discuss the tax implications of the new rules with your testamentary trust lawyer.

There are exemptions and whenever something is very situation specific, the details will matter. For more information, call our testamentary trust lawyers or the Canadian Bar Association has an interesting article on the tax changes surrounding testamentary trusts.

Who Manages The Assets In A Testamentary Trust

The assets of a testamentary trust are often managed by the executor or personal representative of an estate. If that person lacks the financial background to effectively manage the assets, then they are able to hire a financial adviser, lawyer and/or accountant to do so. In other instances a separate trustee is set up in the will to be responsible for the management of the assets of the estate. Again, they are usually able to hire professional assistance to help.

Getting Help From Testamentary Trust Lawyers

The testamentary trust lawyers at Kahane Law Office in Calgary, Alberta can help with your will and estate planning needs. Wills have very long term implications and you should have proper advice. CONNECT NOW. You can reach us at 403-225-8810 or toll-free at 1-877-225-8817 or email us directly here.