Estate Planning for those 65+

Life-interest trusts Will, Estate Planning for 65+

When thinking about estate planning, most people think about the usual documents; wills, powers of attorney and representation agreements. However, Canadians over the age of 65 are eligible for two types of life-interest trusts. These trusts essentially act as a substitute for a Will and address some of the disadvantages of having a Will.

Two types of life-interest trusts:

1.Alter ego trust – created for the benefit of the settlor (trust-maker) alone, during his/her lifetime; and

2.Joint spousal trust – very similar to the alter ego trust, except it is created for the benefit of the settlor and the settlor’s spouse, during both of their lifetimes.

Advantages:

  1. Both trusts allow you to avoid the probate process, meaning you avoid paying probate tax;

  2. You can avoid the compulsory estate planning laws and succession schemes (you are able to leave your estate to anyone you want in any proportion);

  3. These trusts cannot be challenged like Wills can under WESA, therefore, allowing you to avoid potential Will variation claims

  4. Asset protection from creditors; and

  5. Avoiding Powers of Attorney.

  6. Beneficiaries can receive their inheritance with less delay

  7. Professional fees are reduced

Disadvantages:

  1. Tax returns will need to be filed;

  2. Income retained in the Trust will be taxed at the highest marginal rate

Requirements to set one up:

  1. Must be at least 65 years of age to settle and contribute capital property. For joint spousal trusts, both spouses must be over 65.

  2. Must be a Canadian resident

  3. Only the settlor/spouses are entitled to income from the trust during the lifetime of the settlor/spouses.

If you or someone you know is interested in estate planning services, or have any questions, feel free to leave a comment below or reach out and book a consultation.

Steve Parr

An entrepreneur at heart, Steve founded and sold a vacation rental company before establishing Parr Business Law in 2017, giving him unique insight into the entrepreneurial journey. Steve received his law degree from the University of Victoria in 2014 and also holds an B.A. in Gender Studies.

https://www.parrbusinesslaw.com
Previous
Previous

5 Ways To Protect Your Family Financially in Case of Unexpected Passing

Next
Next

5 Professionals to Consult Before Starting Your Small Business