Trusts and Control

Terri Williams, CFP

Most advisors know that everyone should have a will and power of attorneys for property and health. But should everyone have a trust as part of their estate plans?  According to best-selling author Christine Van Cauwenberghe who is also VP, Tax and Estate Planning at IG, trusts are not for everyone. 

  In discussion with Evelyn Jacks (hotlink), at the Distinguished Advisor Conference last week, she pointed out that trusts  are really about maintaining control. 

There are certain circumstances where a parent may want to put their estate into a trust on their death because their children are not old enough or mature enough to manage an inheritance.  But, Christine warns, when does the control end?  “Trusts are important but you don’t want it to go on forever,” she says. 

How old is old enough?  That depends on the child inheriting and the circumstances.  In some cases a child of 20 is mature enough to manage an inheritance. In other cases, the person might not be mature enough until they are much older.

An excellent use for a trust is when someone is leaving an estate to a disabled person who is unable to manage the money themselves.  In this case, a Henson Trust will maintain the disabled person’s social assistance and may maintain and financial or tax benefits they are receiving. 

Christine gave some useful tips when advisors are discussing trusts with their clients.  First, be sure your client goes to a lawyer that knows what they are doing.  A lawyer that drafts Wills, is not necessarily an estate planning lawyer.  Ensure they have the experience to know when and what type of trust might be beneficial.

Second, there are some situations where a corporate trustee could be considered.  For example, if a trust is going to continue for a person’s entire life (for example, a disabled person) a corporate trustee might be a good solution instead of naming a family member. A corporate trustee might also be appropriate if there are no Canadian residents that could act as Trustee or if someone’s assets are extensive and complicated (owning a business for example).  

Financially planning is key to many of the situations where a trust might be considered.   “Sometimes people think a trust is magic wand, and it can be magic, but it has to be done properly,” she said.

Join us next year LIVE in Niagara Falls October 16-18 for DAC Acuity 2022 when the educational extravaganza will continue in-person! Take advantage of early-bird tuition rates and reserve your spot!

Want to learn from this year’s thought leadership? The online certificate course from DAC 2021 is available and includes the recorded presentations of this year’s speakers. Enrol in the Integrated Solutions in Practice Management course by October 31 and save $200 on tuition with code: NEWCOURSE.

Also available:  a great online course on preparing trust tax returns, part of the DFA-Personal Tax Services Specialist^TM program.  Practice managers:  now is a great time to get a head start on training new and returning seasonal staff in tax and accounting offices with these flexible training programs.