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Preparation of Trusts

A trust is a legal structure whereby a “settlor” (the person establishing the trust) appoints a “trustee” (the person, people, or corporation managing the trust) to deal with property or assets over which the trustee has control for the benefit of another person or people called the “beneficiary” or “beneficiaries”. A trust can be established and take effect during the settlor’s lifetime (called an inter vivos trust) or after death (called a testamentary trust). There are many different types of inter vivos and testamentary trusts that may form an integral part of a person’s financial planning during his or her life or estate plan such as family trusts, inter vivos discretionary trusts, disability expense trusts, spousal trusts, alter ego trusts, minor’s trusts, and Henson trusts, to name a few.

There can be many advantages to a properly established trust in the appropriate circumstances, such as tax-savings, protection and management of funds for minors or disabled individuals, preservation of government disability benefits for disabled individuals, the ability to ensure the proper substitution and replacement of trustees, and the ability to choose “remainder” beneficiaries after the death of the primary beneficiary.

It is important to remember that, although the beneficiary has the beneficial interest in the trust property, the trustee has the legal title and control of the trust property and therefore the selection of a reliable and appropriate trustee or trustees is crucial. The trustee will be acting as a fiduciary (i.e., a person in a position of power over a person in a position of vulnerability) and will have duties and responsibilities under the trust document, the applicable legislation, and the common law.