What is a Trust?
Why a Trust?
Testamentary Trusts
Living Trusts
Professional Assistance

What is a Trust?

A Trust is a legal title to property for the benefit of one or more persons. Ownership of the trust property must be legally transferred to a trustee. The people who will benefit from the Trust are known as beneficiaries.

The trustee is required to manage the trust property according to the terms established in the agreement and must use that property solely for the benefit of the named beneficiaries. 

A trust is a relationship among three parties:

The Settlor - the person who establishes the terms and conditions governing the operation of the trust and then transfers legal ownership of the assets to the named trustee.

The Trustee - the individual or corporation that is named as the legal owner of the assets and accepts the responsibility to hold and manage the assets solely for the named beneficiaries.

The Beneficiaries - the individuals or organizations entitled to receive the benefit of the trust during its operation and/or upon its termination.

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Why a Trust?

The reasons for establishing a trust can be many and varied. The settlor may be concerned about caring for a spouse, a dependant child, safeguarding assets for future generations or providing on-going funding to a favorite charity or educational institution. A well-constructed trust is a useful and powerful estate-planning tool.

Why do I need a Trust?

Whether you need to care for someone who has special needs, or you wish to fund a favourite charity a trust will allow you to accomplish your objectives. It can be used to split income among family members, reduce probate and estate costs, and protect assets from creditors. A trust can safeguard your assets for future generations. It can assist in ensuring your wishes are carried out and your beneficiaries' needs are met. 

Factors to consider

Before creating a trust you need to carefully consider what you wish to accomplish and understand the income tax and other legal considerations associated with a trust. You will need to make a number of important decisions, including:

                    Who will act as the trustee?

                    What property will you transfer into the trust?

                    Who will be the beneficiaries, and how will their needs be met?

                    Will the trust come into effect while you are still alive or after your death?

                    Will the trust be revocable or irrevocable?

                    How long will the trust operate? 

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Testamentary Trusts

The terms and conditions governing a testamentary trust are normally contained to the trustee until the settlor dies, testamentary trusts do not come into effect until that date. Therefore, at any time prior to death, the settlor can modify or revoke the terms of the testamentary trust. Once a testamentary trust comes into being it can only be modified by the courts or, in some provinces, through the mutual agreement of all parties to the trust.

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 Living Trusts

A living (inter vivos) trust is established during the settlor’s lifetime and comes into being when the trust agreement is signed. The trust property is legally transferred to the trustee at that time. Living trusts can be revocable or irrevocable:

A revocable trust can be changed or collapsed by the settlor at any time;

An irrevocable trust cannot be changed or collapsed and must continue to operate as set out in the trust indenture.

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Settlors need to ensure that the trust arrangement is properly established to meet their objectives and the needs of the beneficiaries. Trustees must have the knowledge and skill to operate within the terms of the trust agreement; they are responsible to the beneficiaries for what occurs during the course of the administration. Virtually every decision related to the set up and operation of a trust will have tax implications. Trusts are a complex legal area and the need for professional assistance cannot be over-emphasized.

What is a Professional Trustee?

Realizing your personal and financial objectives and ensuring the well-being of your family requires careful and thorough preparation. You can manage and oversee many of these tasks yourself, but certain key roles such as executor and trustee must be delegated to others. The trustee that you appoint is responsible for holding and managing your assets. The executor you name in your Will is accountable for safeguarding your assets and carrying out the administration and final distribution of your estate. These appointments require careful consideration. 

Why should I consider a Professional Trustee?

Some people ask a family member or close friend to assume these responsibilities. Most individuals do not fully understand the complicated duties and personal liability involved in the administration of estates and trusts. Unfortunately, inexperience, lack of judgment or neglect can lead to delays, conflicts, unnecessary fees and even financial losses. Stability, trustworthiness and expertise are all hallmarks of a professional trustee. 

Through OMISTA you have access to a team of specialists with the time, knowledge and expertise to provide the needed advice and services. A professional trustee is recommended to those who:

• Do not wish to unduly burden family members
• Are concerned that there may be conflict among beneficiaries
• Want a fair-minded and experienced professional to handle the complete  administration
• Have accepted the appointment as an executor or trustee and require professional guidance and assistance

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