LEGAL IMPERATIVES for TRUSTS
To schedule an appointment, contact our law firm at 403-400-4092 or Chris@NeufeldLegal.com
It is important to recognize that trusts are legal constructs, such that they must be correctly developed and drafted, such that they are not only capable of realizing their intended objectives, but that they might also withstand legal scrutiny from external parties that might have differing or opposing interests, and are seeking to optimize their own objective pursuits (such as a commercial creditor, a disgruntled family member that believes they've been improperly disinherited, or the Canada Revenue Agency). For that reason, it is imperative that the legal complexities associated with drafting and enacting a valid trust instrument, are addressed by engaging knowledgeable legal counsel, including: (a) ensuring legal validity and compliance, (b) tailoring the trust to your specific needs, (c) properly funding the trust, and (d) avoiding costly future errors.
A. Ensuring Legal Validity and Compliance
Trust laws are complex and vary significantly by jurisdiction, such that it is important that:
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The trust instrument meets all jurisdiction-specific legal requirements for execution and validity.
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The legal language used is precise and unambiguous, preventing later confusion or challenges from beneficiaries.
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The trust instrument is properly structured so as to be consistent with other related estate planning documents, like your last will & testament or power of attorney for finances.
B. Tailoring the Trust to your Specific Needs
Generic trust instruments (whether attained from an online form, a do-it-yourself templates, or a simplistic trust from a lawyer) rarely address the unique complexities of a person's life and finances, in relation to complicated tax legislation and tax structuring, such that there is immense value in a personalized tax instrument that is structured on the basis of relevant personal, legal and tax considerations:
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Determine the appropriate form of trust (e.g., revocable, irrevocable, special needs, etc.) based on your goals, such as tax minimization, asset protection, or managing a blended family.
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Draft custom clauses for specific situations, such as providing for a beneficiary with special needs without jeopardizing government benefits, or setting conditions on how and when a beneficiary receives assets.
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Account for complex assets like business interests, real estate in multiple jurisdictions, or significant investments.
C. Proper Funding of the Trust
Drafting the trust instrument is only the first step; the trust must be funded, which means legally transferring ownership of your assets into the trust's name.
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You must ensure assets, such as real estate deeds or bank account titles, are correctly retitled to the trust.
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You must ensure beneficiary designations on other accounts (like retirement or life insurance) are properly coordinated with the trust, a critical step often overlooked when not engaging legal counsel.
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A trust that isn't fully or properly funded is often worthless, forcing those assets into the public and time-consuming probate process - the very thing that many trusts were designed to avoid.
D. Avoiding Costly Future Errors
Mistakes in a trust often aren't discovered until after you've died, leaving your family to deal with the consequences. A small error in a generic trust instruments (whether attained from an online form, a do-it-yourself templates, or a simplistic trust from a lawyer) can lead to:
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Legal challenges and disputes among beneficiaries, eroding family relationships and leading to expensive, drawn-out litigation.
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Unintended tax consequences that could cost your estate and beneficiaries significantly more than the legal fees incurred in having the trust instrument appropriately drafted by legal counsel.
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The invalidation of the trust itself, forcing assets into probate.
As such, when you are looking to create a trust that legally facilitates your objective goals, contact our law firm today to schedule a confidential consultation at at 403-400-4092 or via email at Chris@NeufeldLegal.com.
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Henson Trusts. A Henson Trust is a trust (most frequently forming part of a parent's or grandparent's Will) that provides the trustees with the absolute discretion to distribute income and capital from the trust to the beneficiary as they see fit. The trustees have full control as to when, if and how much income or capital is to be paid to the beneficiary. Read more. |
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Inter Vivos Trusts. An inter vivos trust (also known as a living trust) is a legal arrangement created and funded during the lifetime of the settlor (the person creating the trust). The term "inter vivos" comes from the Latin "between the living" and as such is distinguishable from a testamentary trust, which is established on the death of the settlor. Read more. |
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Testamentary Trusts. A testamentary trust is a trust that is created by a person's will and comes into effect only upon their death. It is an alternative to distributing all assets directly to beneficiaries. Instead, assets are transferred to the trust, which is then managed by a trustee for the benefit of the designated beneficiaries. Read more. |
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Trust for Minors in a Will. A trust for minors in a will (a testamentary trust for minors) is a legal arrangement created within a will that takes effect upon the death of the person who made the will (the testator) that protects and manages a child's inheritance (or grandchild's inheritance) until they are old enough to manage it themselves (as determined by the testator). Read more. |
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Irrevocable Trusts. An irrevocable trust is a legal arrangement where the creator of the trust (known as the grantor or settlor) permanently transfers assets into the trust, giving up all ownership and control over those assets. Once established, an irrevocable trust generally cannot be changed, amended, or revoked without the consent of all beneficiaries, and sometimes a court order. Read more. |
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Asset Protection Trusts. An Asset Protection Trust is a legal arrangement designed to safeguard an individual's assets from potential future claims by creditors, lawsuits, or judgments. The core principle behind an asset protection trust is to legally separate ownership of assets from the individual who created the trust, making those assets less accessible to outside parties. Read more. |
IMPORTANT NOTE: This website is designed for general informational purposes. The site is not designed to answer specific questions about your individual situation or entitlement. Do not rely upon the information provided on this website as legal advice in respect of your individual situation nor use it as substitute for individual legal advice. If you want specific legal advice, you need to engage a lawyer under established legal engagement procedures that have been specifically agreed to by that lawyer.
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