You can elect to transfer assets to the trust at FMV, which can be advantageous if you have significant capital losses, own certain qualified small business corporation (QSBC) shares, or certain qualified farm or fishing property (QFFP). Unlike other trusts, many assets 2 may be transferred to an alter ego trust at cost rather than at fair market value (FMV), allowing you to defer taxation of capital gains until the assets are sold or you pass away (or your spouse if it’s a joint partner trust). Often these types of trusts are used for probate planning, to limit inter-provincial asset issues, and for incapacity planning. While probate is a public process, the disposition of trust assets is usually private. On your death, the disposition of trust assets generally avoids probate and associated legal fees. This allows you, the settlor of the trust, to name beneficiaries that’ll benefit from the trust when they pass (or the surviving spouse if it’s a joint partner trust), which is similar to naming beneficiaries in the residual provisions of your will. For a joint partner trust, only one of the spouses (the settlor or transferor) must be 65 or older.Īlter ego trusts are created by statute, namely the Income Tax Act (ITA) and are often touted as a will substitute since the trust document directs the disposition of trust assets on your death (or the death of the surviving spouse if it’s a joint partner trust). This continues until the death of the surviving spouse. The trustee (or majority of trustees if there are multiple trustees) and the alter ego trust itself must be resident in Canada.Ī joint partner trust is similar except that both spouses 1 must be entitled to receive all the income of the trust, and no other persons may be entitled to receive or benefit from the income or capital of the trust. If you name yourself as trustee, ideally you name an alternate trustee that can step in and administer the trust on your passing (similar to that of an executor). While you can appoint a third party as trustee or co-trustee, you can also appoint yourself. You (the settlor) must be a Canadian resident, 65 or older, and be the sole beneficiary of all income of the trust during your lifetime-no other person may be entitled to receive or benefit from the income or capital of the trust during your lifetime. Other continental Europe Wealth and Asset ManagementĪmerica Offshore Wealth and Asset ManagementĪn alter ego trust is an inter-vivos trust established after 1999, meaning it’s set up during your lifetime. United Kingdom Wealth and Asset Management United States Wealth and Asset Management
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