Testamentary Trust - Calgary Trust Lawyer

Neufeld Legal P.C. can be reached by telephone at 403-400-4092 or email Chris@NeufeldLegal.com

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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.

Prominent Characteristics of a Testamentary Trust:

  • Creation: The instructions for creating the trust are included in the deceased person's will, with a testamentary trust coming into effect only upon the death of the settor (testator) [as distinct from an inter vivos trust, which is created and funded during the lifetime of the settlor].

  • Parties Involved in a Testamentary Trust:

    • Settlor/Testator: The person who creates the trust in their will.

    • Trustee: The individual or entity (e.g., a trust company) appointed to hold and manage the assets of the trust. The trustee has a fiduciary duty to act in the best interests of the beneficiaries.

    • Beneficiary: The person or people who will receive the benefits from the trust, such as income or capital.

  • Funding: The trust is funded by assets from the deceased's estate after their death and the will has gone through the probate process.

  • Management: The trustee invests and manages the trust assets according to the terms set out in the will, and distributes income and capital to the beneficiaries as instructed.

  • Testamentary trusts are a valuable estate planning tool for several reasons:

    • Controlling Asset Distribution: They allow you to control when and how your beneficiaries receive their inheritance, which is especially useful for:

      • Minors: Assets can be held in trust until a child reaches a certain age, or distribution can split up at different ages.

      • Beneficiaries with Special Needs: A "Henson Trust" can be created to provide for a person with a disability without jeopardizing their eligibility for government assistance.

      • Spendthrift Beneficiaries: It can protect an inheritance from a beneficiary who may not be good at managing money.

    • Blended Families: A testamentary trust can ensure that a surviving spouse is provided for during their lifetime, while the remaining assets are eventually passed on to children from a previous marriage.

    • Asset Protection: A properly structured trust can offer some protection against creditors of the beneficiaries, including in the case of a marriage breakdown.

    • Providing Oversight: It allows a trustee to manage the assets on behalf of beneficiaries who may lack the skills or desire to do so themselves.

    • Charitable Giving: A trust can be used to provide for a charity after a loved one has been cared for during their lifetime.

Contact our law firm today to learn how our legal team can help you plan for the future or deal with the legal demands associated with the passing of a loved one. Contact our law firm at 403-400-4092 or via email at Chris@NeufeldLegal.com to schedule a confidential initial consultation.

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.

 

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.

 

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.

 

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.

 

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.

 


Understanding Irrevocable Trusts

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