Estate Planning for the 65+ On top of your regular estate planning documents (wills, powers of attorney and representation agreements), Canadians over the age of 65 can take advantage of a couple of types of life-interest trusts, which essentially can act as a substitute for a will and replace some of the things that aren’t so ideal about having a will. There are two main kinds of life-interest trusts:
- An alter ego trust is a trust created for the benefit of the settlor (the trust-maker) alone, during his or her lifetime; and
- A joint spousal trust which is similar, except if it is created for the benefit of the settlor and the settlor’s spouse, during both of their lifetimes.
Individuals over 65 can contribute capital property to one of these life-interest trusts on a tax-free basis for their use, benefit and enjoyment during their lifetime(s). The settlor of a joint spousal trust must be over 65 – however, if both spouses want to contribute capital property, they must both be over 65. Why would you want to set this up? There are some really good reasons for setting up a life-interest trust, like:
- Avoiding the probate process and therefore, paying probate tax;
- Avoiding compulsory estate planning laws and succession schemes (you can leave your estate to anyone you want in any proportion);
- Avoiding potential wills variation claims (if your estate may be subject to a claim then this is one way to take your estate out of this constraint);
- Asset protection from creditors; and
- Avoiding Powers of Attorney.
Can you set one up? Alter ego trusts and joint spousal trusts have similar, but slightly different requirements:
- You need to be at least 65 to settle and contribute capital property. For joint spousal trusts, this means that for any property held jointly, both spouses must be over 65.
- You must be a Canadian resident.
- No one else, other than the Settlor/Spouses, can be entitled to income from the trust during the lifetime of the Settlor/Spouses.
If you are interested in any estate planning services, we are offering 30% off services provided if you book an appointment with us in March and April. An additional 10% will be given to those working in public service positions during this uncertain time. Please note that your initial meeting must happen on or before April 30, 2020 to be eligible for the discounted rates, along with some conditions which we will email you ahead of time. Email us at firstname.lastname@example.org to receive our workbook which outlines pricing details, the estate planning process, and the information we need to get you started. Estate planning is something we all need to do—for peace of mind for ourselves and our loved ones. Our team of skilled legal experts can help tailor your estate planning to your exact needs, ensuring your beneficiaries a stress-free experience in the event of your passing and potentially decrease any fees that may be incurred if a will is not in place. Paperclip Law is committed to helping our clients throughout the Vancouver Region and Squamish find perfectly tailored solutions when it comes to managing their assets today, tomorrow, and in the many years to come. We believe that estate planning can be simple, and are happy to partner with you to make the process feel easy and transparent. Contact us today to learn more!