Seven good reasons to set up a testamentary trust

Posted on 10/11/2023 at 09:47

Man holding document ready to sign

A testamentary trust remains one of the best protection and control tools for managing your assets after your death. (Photo: 123RF)

GUEST EXPERT. When it comes to testamentary trusts, you may be wondering whether it is still relevant to introduce them, or whether there is a situation where we should say “there, it’s a must”.

Here are some non-exhaustive reminders regarding testamentary trusts. They are presented for informational purposes; It is always recommended to consult an expert when setting up a trust.

First of all, you should know that this is a separate designated property that comes to life after your death, if you have provided for it in your will. You can transfer part or all of your property to one or more beneficiaries and it will be managed by a trustee of your choice. You can also designate multiple “orders” of beneficiaries, for example: to your children and, after their death, to their children.

Here are some examples of situations where a testamentary trust is still very useful to protect your loved ones:

  • If you are concerned with the protection of a minor child in the event of the death of both parents.
  • If you have a disabled or incapacitated child, you may want to ensure a comfortable life for them by transferring assets into a testamentary trust for their benefit, and you decide who will manage them and who will benefit from the balance after the child’s death. ..
  • In the context of a second union, where you have children from a previous union: if you want your spouse to benefit from your property while ensuring that upon their death the property reverts to your children and not your spouse’s heirs.
  • When you want to leave an amount greater than $40,000 to a minor child. In Quebec, if a minor child owns assets worth more than $40,000, their parents are required to put in place measures to monitor their administration as guardians, which includes the process of establishing a guardianship board and annual reports to that board and the Public Curator.
  • In cases where your children (even adults) or your loved ones have addiction problems or lack financial maturity and knowledge in managing large sums.
  • Even if you don’t have any children, you may want your spouse to benefit from your estate, but have all or part of it revert to your family or be transferred to a charity on his death.
  • When you’re worried about the pressures that may be placed on your spouse, you can’t say no to children or third parties who keep asking for gifts.

What to remember: yes, every situation is unique, but a testamentary trust remains one of the best tools of protection and control for managing your estate after your death, especially when family dynamics or the complexity of what makes up your estate could spark harmony among your loved ones .

Sophie Sylvain, BAA, Pl. Finn.

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