Creating a Trust in Canada
By: Kevin Johnson | Posted: 28th July 2009
A trust is a device used to store assets and divvy them out under certain rules. Trusts contain any asset type a trustor (the person forming the trust, also referred to as grantor) chooses to put in it. Many trusts are setup with loved ones in mind, providing for them after the trustor passes on. Other trusts have charities as beneficiaries. Some have a mixture of both. Living and irrevocable trusts are two of the more common types and although they differ, the general principles for creating them are about the same.
Assets. Before creating a trust, it is important to know what the trust should contain. The trustor needs to make a list of what assets she owns and parse through to decide what the trust will eventually contain. Trust assets are under the control of the trustee or administrator of the trust so it is vital for a grantor to add only assets that they have no problem relinquishing control over. Even though a trustor can appoint herself trustee, it is important to choose wisely.
Professional help. There are sites that allow trustors to download the necessary documents needed to create a trust, but it would be a good idea to seek professional help. Even at the stage of listing his assets, a trustor may not have the experience or foresight that an estate lawyers do, which may come back to haunt him. A well-trained professional will know what to keep in and out of a trust, out of consideration for possible future events.
Trustee. Like the executor of an estate, trustees are in charge of administrating the assets and acting as an agent of the trust. This may include making sure beneficiaries receive monthly checks or the granting of scholarships to applicants- whatever the intent of the trust may be. One can appoint herself as trustee or in the case of a testamentary trust anyone (or any group) they so choose. After appointing a trustee, a successor should also be appointed in case the trustee dies or becomes unable to perform their duties.
Beneficiaries. Beneficiaries of the trust are heirs or those who benefit from trust assets. These heirs can be whomever the trustor chooses, albeit a charitable organization, business, friends or family members. Beneficiaries should be named specifically along with what they will receive.
Trusts yield many benefits, tax or otherwise. Setting one up may seem daunting, but it isn't. With the assistance of an experienced lawyer and thoughtful decision-making on the part of the trustor, creating a trust is a relatively easy process.
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Tags: checks, mixture, grantor, trustee, general principles, future events, beneficiaries, charities, scholarships, foresight, necessary documents