CIBC Private Wealth
May 09, 2023
Why add a trust to your estate plan?
“Trusts can play an important part in your estate plan,” says Jamie Golombek, Managing Director, Tax & Estate Planning with CIBC Private Wealth. “They can be especially useful for families with more complex dynamics, or if you wish to have greater control over your assets after you’re gone.”
What is a trust and which type of trust is beneficial for estate planning?
There are two types of trusts that are particularly popular for estate planning: inter-vivos trusts and testamentary trusts. An inter-vivos trust takes effect during your lifetime. A testamentary trust is included as part of your will and takes effect after you pass away.
The six benefits of setting up a trust?
When you establish a trust, you transfer legal ownership of assets to a trustee. You set parameters around who gets the assets, when and under what circumstances. Trustees don’t have to be immediate family members. They can be close friends, professionals like lawyers and accountants, or corporate entities like trust companies.
Protecting your assets and your legacy. Having assets in a discretionary trust may help protect your assets and offer your beneficiaries inheritance protection should they later be the subject of a lawsuit.
Allocating an inheritance for beneficiaries. An inheritance trust can help you support your spouse or partner while preserving some of the estate for your children. This may be particularly useful for blended families.
Ensuring assets are transferred to minors. With a trust, you can appoint someone to manage funds on behalf your children until they reach the age of majority or older.
Controlling distributions to beneficiaries. Trustees maintain control over both the timing and the amount paid out to your beneficiaries based on your wishes.
Leaving assets to dependents with disabilities. If you have a loved one with a disability, a trust may offer financial support without compromising their government benefits.
Tax benefits by splitting income with your spouse. Trusts can also be useful if you’re in a high tax bracket and want to help family members in a lower bracket. You can loan funds to a trust with family members as beneficiaries and provide your family with income paid from the trust.
“Since trust and tax laws are complex,” notes Jamie Golombek, “advice should be obtained from legal and tax professionals prior to implementing any of the trust strategies outlined above.”
At CIBC Private Wealth, we take a comprehensive approach to managing, building and protecting your wealth. If you'd like to discuss the benefits of setting up a trust in more detail or have questions about your investments, please get in touch with me any time.