Our firm prepares inter vivos trusts, including family trusts, when they are appropriate tools to meet our clients’ estate planning needs. We also prepare the following trusts, as required:
A Henson trust is a lifetime trust most often created for the benefit of a person with a disability. This type of trust gives trustees unfettered discretion to distribute funds to the beneficiary bearing in mind the legislative restrictions. One purpose of a Henson trust is to ensure that a beneficiary’s receipt of ODSP benefits is not negatively impacted by the inheritance.
Alter Ego Trust
An alter ego trust is a trust created by an individual (referred to as the ‘settlor’) who is 65 years or older at the time of creation. An alter ego trust permits the settlor to act both as beneficiary and trustee – hence the name, ‘alter ego.’ With an alter ego trust, the settlor must be the only beneficiary of the trust and the trust may only operate so long as the settlor remains living. Any assets remaining in the trust on death of settlor will be distributed in accordance with the terms of the trust.
Joint Partner Trust
This type of trust possesses many of the same characteristics as an alter ego trust; however, using a joint partner as opposed to an alter ego trust permits the settlor to include their married spouse or common law partner as a beneficiary. An important term of the joint partner trust is that all income from the trust must be received in some combination by the settlor and their spouse before the last living spouse passes away.
Inter Vivos Trust and Testamentary Trust
An inter vivos trust is settled by a settlor under a trust document while the settlor, trustee(s) and beneficiaries are alive or contemplated. In contrast with an inter vivos trust, which is created during the trustor’s lifetime, a testamentary trust is created as a result of the testator’s death. The terms of a testamentary trust are typically determined by the testator’s will, or by a court order regarding the deceased person’s estate.
An insurance trust is a type of testamentary trust whereby the proceeds of a deceased person’s life insurance policy can be transferred to a trustee to be managed for a beneficiary ‘outside of the estate’. In this sense, a testamentary insurance trust is not subject to probate fees or estate administration taxes, which makes it a useful estate planning tool in many circumstances.