Why Should You Consider a Trust
by Bart Aldrich, CLU

The stigma often attached to a trust is that one is only useful for the rich and famous. With today’s inflated property values, focus on retirement funds and increased number of self-employed a trust may be appropriate for many. You may be richer than you think.

A trust is a formal arrangement where the legal owner (settlor) transfers assets or property to a trust. A trustee is appointed to follow the rules of a trust agreement and manage the assets for the beneficiaries, who will ultimately benefit from those assets. One of the more common situations where a trust may be useful is in the case of minor children, or young adults, who are the intended beneficiaries of insurance proceeds. A trust can ensure funds are used for the well being of the children while minors, with additional controls in place to manage the funds once the children reach the age of majority (age 19 in BC). Can you imagine your children receiving your insurance benefits at age 19? Would they be in a position to manage this much money all at once? A trust can be structured to distribute funds in accordance with strict terms of the trust, at the discretion of the trustee(s), or a combination of both. A trust allows you both flexibility and control.

A properly structured trust can also provide significant tax advantages, by creating a separate taxpayer. Income earned within the trust is taxed at the same marginal tax rates as an individual. If the intended beneficiary is earning income from employment, this creates an opportunity for income splitting that would not be available if the funds were received directly by that beneficiary.

Establishing a trust requires legal and tax advice. Once the insurance or other assets are transferred to the Trust, annual tax filings will be required, which will have associated ongoing costs. If you would like more information about trusts, and to discuss if a trust is right for you, please contact our office.
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This article was prepared by Bart Aldrich of Arbutus Financial Services Limited for Arbutus Financial Services. Bart Aldrich is not affiliated with Dundee Private Investors Inc. (“Dundee Private Investors”), a DundeeWealth Inc. Company. This is not an official publication of Dundee Private Investors and the views (including any recommendations) expressed in this article have not been approved by, and are not necessarily those of, Dundee Private Investors.