Page 163 - A Canuck's Guide to Financial Literacy 2020

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Trusts

Using trusts is another way that you can reduce probate. Trusts are a great way to maintain
control of assets during and after death. There are many types of trusts and to create one,
you would need a trustee and a settlor. The settlor would be the individual who would
establish the trust and proceed to transfer property to the trust. The trustee would be
responsible to maintain the property for the benefit of the beneficiaries.

Certainties of Trust

In order for the property transfer to constitute a valid trust, it must meet the three certainties:

▪ 1. The Certainty of Intention;
▪ The settlor intends for the property to be held in trust for the beneficiary of the
beneficiaries.
▪ 2. The Certainty of Subject Matter; and
▪ The property that is being held in trust is clearly described in detail.
▪ 3. The Certainty of Objects
▪ The beneficiaries are named and clearly identified in order to avoid conflicts in
the future.

Inter-Vivos Trusts

Below are inter-vivos trust that one could open to transfer or gift property during one’s
lifetime as opposed to a testamentary trust when transfers take effect on death, usually as
part of a will.

• Revocable Trust
When the settlor transfers in property into the trust, the property can be transferred
back in the hands of the settlor

• Irrevocable Trust

When property is transferred to the trust, it cannot be transferred back.
• Spousal Trust

Set up for the benefit of the spouse and no one else can have access to the trust’s
assets.
• Family Trust

Property is transferred into the trust for the benefit of family members

• Commercial Trust

Commercial trusts are known to be used for investment purposes. Mutual funds
would be considered commercial trusts.