TRUST FUND LAWYERS IN MISSISSAUGA
SETTING UP A TURST
What Is A Trust?
Trusts are generally created to hold property or assets for the benefit and use of a particular person. The person who manages the trust is known as a trustee, while the person who benefits from the trust is a beneficiary. The person who sets up the trust is known as the Settlor. The person who benefits from the trust is also said to have a ‘beneficial interest’ in the trust.
Living Trusts, Blind Trusts & More
LIVING TRUSTS (OR ‘INTER VIVOS TRUSTS’)
Living Trusts are typically created in order to establish a direction on how assets will be distributed to the beneficiaries of the trust. These kinds of trusts can operate once the person that has created the trust passes away, but they are exempt from probate taxes since living trusts are not considered part of one’s estate. The advantage of a living trust is that they are not part of public record, meaning that creditors cannot make claims on assets contained in a living trust.
A blind trust is a trust that is set up in order for the individuals who have beneficial interests in the trust to have no knowledge of the holdings of the trust. The purpose of setting up a blind trust is to avoid any conflicts of interest between the beneficiary (the person that has the beneficial interest in the trust) and the investments of the trust. In these kinds of trusts, the beneficiaries are also the same individuals who set up the trusts (also known as the Settlors). The blind trust agent (the person who is empowered to administer the trust’s assets) may not provide any information or daily briefs about the operations of the trust to the beneficiary.
A testamentary trust is created through a Will, and comes into effect at death. Testamentary trusts are effective ways of preserving wealth and minimizing costs associated with the Estate. An example of setting up a testamentary trust for the benefit of a loved one is setting up a trust that is set up for minor children to receive their benefits at various ages, in order to pay for education. Another example of setting up a testamentary trust is setting up a trust for a spouse that lacks financial experience and fortitude.