What Is A Trust?
A trust is a legal relationship in which a person or legal organization is entrusted with the legal title to property and is obligated to hold and utilise it for the benefit of another.
A trust is a fiduciary arrangement in which a third party, or trustee, holds assets on behalf of one or more beneficiaries. As part of a well-crafted estate plan, a trust provides protection to the rights of contingent beneficiaries, or to preserve entitlements to government assistance where a beneficiary suffers from a disability. Below, we provide a brief description of some of the different types of trusts. In order to determine whether a trust is appropriate for your estate plan, we recommend that you consult with a qualified estate lawyer and an accountant to ensure proper completion.
Types Of Trusts
Family Trusts
Simply explained, a family trust is a legal relationship between the grantor, trustee and one or more beneficiaries when it comes to a family’s estate and assets. The purpose of a family trust is to establish a clear way for your family to receive financial benefits in the way in which you have set it out in the trust. For example, a family trust may be beneficial where a family member has poor spending habits, or suffers from an addiction, and the grantor, the person creating the trust, prefers to maintain control over the spending. In a family trust a trustee appointed by the grantor would oversee the family trust.
To ensure that a trust is properly set up, we encourage you to seek the legal advice of a qualified lawyer and an accountant.
Henson Trusts
Henson trusts are an important part of estate planning when there is a family member with special needs. A Henson Trust is set up through the will. The purpose of a Henson Trust is to provide for that family member with special needs after the will maker dies without compromising their eligibility for government benefits.
Named for an Ontario case whereby the court determined that a trust set up for a disabled beneficiary would not result in a loss of that beneficiary’s government benefits, Henson trusts give the trustees complete discretion when it comes to the distribution of capital and assets to the beneficiary.
The requirements for a Henson Trust to be valid are very specific, so it’s important that you seek legal advice when establishing a Henson trust through your will. Our team at Hummingbird Lawyers LLP has wide experience with various trusts and are pleased to walk you through the process.
Inter Vivos Trusts
From the Latin term meaning “between the living”, Inter Vivos trusts are trusts that you can set up while you are living as opposed to a testamentary trust, which is set up after one’s death pursuant to their will. Inter Vivos trusts can be set up to allow your beneficiaries to receive trust income rather than having that income allocated to the trust and taxed accordingly.
Due to the taxation and legal complexities associated with Inter Vivos trusts, it is always best to consult with a qualified lawyer and accountant when establishing this type of trust.
Hummingbird Lawyers LLP Can Help
With our professional team’s vast experience in this area of law, Hummingbird Lawyers LLP can assist you with not only setting up the appropriate trusts for your family, but we will also help you understand your options so that you can make the best decision for your loved ones. If you’re looking for skilled and experienced lawyers in Vaughan or lawyers in Toronto, Hummingbird Lawyers LLP has offices at each location for your convenience.
If you have questions about trusts, please contact:
Tracey Jones, Law Clerk
Email: info@hummingbirdlaw.com
Phone: 905 731 1911
For all other inquiries, please fill out this form and our Wills & Estates lawyers will get back to you
