The Role of a Trust in Estate Planning

More Than Just Preparing a Will

July 13, 2017

As I have written recently, estate planning is about more than just preparing a Will. An estate plan can help you define your legacy and preserve wealth,. Most importantly, it can give you peace of mind knowing you have prepared as best you can for the financial security of your family.

A CIBC poll conducted in 2015 found that while more than half of Canadians (55%) have written a Will, very few have included trusts as part of their estate plans.

In offering an interpretation of the poll findings, Jamie Golombek, Managing Director of Tax and Estate Planning, CIBC Wealth Strategies Group, observed that a trust lets investors transfer assets to a trustee who will manage the assets for the benefit of the beneficiary under the terms of the trust.: ‘You can indicate in the trust document that the money should be used to pay for school tuition, rather than to buy a sports car.’

Some background about trusts

Trusts have been used in estate planning in the common law world for centuries, often because of their unique structure and flexibility. Despite their benefits and timelessness, trusts are often misunderstood, underappreciated and, as a result, underutilized.

Trusts are valuable estate planning tools because they allow a person to indicate in the trust agreement how assets are to be managed and ultimately transferred to beneficiaries, often in a tax-efficient manner. Due to the complexity of trusts, Mr. Golombek recommends individuals obtain advice for their specific situation from a competent expert in the trust and estate planning field.

Trusts, some advantages

Jamie Golombek points out that trusts can offer income-splitting opportunities, noting that, ”If you wait until after death to benefit from trusts, you may miss many years of potential tax savings from income splitting.” Assets inherited directly may become ‘subject to certain legal claims, such as creditor claims in the event of the bankruptcy or claims by a former spouse in the event of divorce.’ Having the assets left in a trust may help insulate assets from some of those claims against the beneficiaries.

Developing a Comprehensive Estate Plan

The Michael Fahy Group, backed by the resources of CIBC Private Wealth Management, can provide you with specialized support in developing a comprehensive estate plan. This may include discussions about the role of a trust in helping ensure that your wishes are fulfilled.

As part of that service, you can access two important free ebooks – a Planning Your Legacy brochure and Estate Inventory Booklet – that will help you understand and successfully manage this important process.

Wealth is about more than just assets. It’s about independence, financial success, and the ability to meet the needs of your family and support your favorite causes. Regardless of how much wealth you’ve accumulated or want to accumulate, your estate plan – like any important long-term undertaking – requires considered thinking, specialist expertise and scrupulous attention to detail. Please contact me if I can help:

Michael Fahy, The Michael Fahy Group, CIBC Wood Gundy, 604-691-7207.