Edmonton Wills & Trusts

Frequently Asked Questions

What is a trust?

A trust is:

• Legal arrangement – That holds assets for beneficiaries
• Three parties involved – Settlor, trustee, and beneficiaries
• Separate entity – From personal ownership
• Managed by trustee – Who follows trust terms
• Can be flexible – Customized to specific needs
• Must be valid – Follow legal requirements

What are the benefits of a trust?

Benefits include:

• Asset protection – From creditors and lawsuits
• Tax advantages – Potential tax savings
• Privacy – Trust details remain private
• Control – Over asset distribution
• Avoids probate – Faster asset transfer
• Professional management – Expert handling of assets

How do I choose a trustee?

Consider someone who is:

• Trustworthy – Can be relied upon
• Financially savvy – Good with money management
• Available – Has time to manage trust
• Impartial – Can be fair to all beneficiaries
• Organized – Good with details and records
• Local – Lives in Alberta

What is a settlor?

A settlor is:

• Person who creates trust – Also called trustor or grantor
• Transfers assets – Into the trust
• Sets terms – Decides trust rules
• Can be beneficiary – In some cases
• Must be competent – When creating trust
• Can be multiple people – Joint settlors

What are trust assets?

Trust assets can include:

• Real estate – Properties and land
• Investments – Stocks, bonds, mutual funds
• Bank accounts – Cash and deposits
• Business interests – Company shares
• Personal property – Valuable items
• Intellectual property – Patents, copyrights

What is a trust deed?

A trust deed:

• Legal document – That creates the trust
• Outlines terms – Rules and conditions
• Names parties – Settlor, trustee, beneficiaries
• Describes assets – What’s in the trust
• Sets distribution – How assets are given
• Must be signed – By all required parties

How are trusts taxed?

Trust taxation:

• Separate entity – Files own tax returns
• Different rates – From personal taxes
• Beneficiary income – Taxed to beneficiaries
• Capital gains – Special rules apply
• Deductions allowed – For trust expenses
• Professional advice – Recommended

Can a trust be changed?

Depends on type:

• Revocable trusts – Can be changed or cancelled
• Irrevocable trusts – Generally cannot be changed
• Court approval – May be needed for changes
• Beneficiary consent – Sometimes required
• Specific terms – May allow modifications
• Legal advice – Recommended for changes

What is a discretionary trust?

Discretionary trust:

• Flexible distributions – Trustee decides amounts
• Protects assets – From beneficiary claims
• Tax planning – Potential advantages
• Customized payments – Based on needs
• Professional management – Trustee control
• Common for minors – Until maturity

How do I protect assets in a trust?

Asset protection:

• Proper transfer – Assets must be in trust
• Clear terms – Well-defined trust rules
• Good trustee – Competent management
• Regular reviews – Ensure effectiveness
• Legal compliance – Follow all requirements
• Professional advice – For complex situations

What is a family trust?

Family trust:

• For relatives – Benefits family members
• Tax planning – Family income splitting
• Asset protection – From outside claims
• Succession planning – Business transfers
• Can be flexible – Customized to needs
• Requires planning – Professional advice

How do I dissolve a trust?

Trust dissolution:

• Follow terms – As set out in trust
• Get consent – From beneficiaries
• Court approval – May be needed
• Distribute assets – According to terms
• File final taxes – Complete obligations
• Legal advice – Recommended

What is a trust protector?

Trust protector:

• Oversees trustee – Monitors management
• Can remove trustee – If necessary
• Modifies terms – If allowed
• Protects beneficiaries – Ensures proper care
• Independent role – Separate from trustee
• Optional position – Not always needed

How do I find a good lawyer?

Finding a lawyer:

• Check experience – Look for trust law specialization
• Review credentials – Professional qualifications
• Consider reputation – Standing in legal community
• Check references – From other clients
• Interview multiple – Meet with several lawyers
• Get referrals – Ask for recommendations