Trust Agreement Canada: A Comprehensive Guide
Trust agreements are an essential part of estate planning in Canada. They offer people the ability to manage their assets and provide for their loved ones after they pass away. In Canada, there are two main types of trust agreements: inter vivos trusts and testamentary trusts. In this article, we will discuss what trust agreements are, why they are important, and the different types of trust agreements available in Canada.
What is a trust agreement?
A trust agreement is a legal document that outlines how a person`s assets will be managed and distributed after their passing. With a trust agreement, an individual can transfer their ownership rights to a trustee, who will then manage the assets on behalf of the beneficiaries named in the agreement.
One of the main benefits of a trust agreement is that it allows a person to ensure that their assets will be managed and distributed according to their wishes. This can be particularly important for people who have complex estates, such as those with multiple businesses or properties.
Why are trust agreements important?
Trust agreements are an essential part of estate planning. They can help ensure that a person`s assets are distributed in a manner that accords with their wishes, rather than being subject to the laws of inheritance.
One of the key benefits of trust agreements is that they offer greater flexibility than other estate planning techniques. With a trust agreement, an individual can determine exactly how their assets will be managed and distributed. They can also choose when the trust will take effect, whether during their lifetime or after their passing.
Types of trust agreements in Canada
There are two main types of trust agreements in Canada: inter vivos trusts and testamentary trusts.
Inter vivos trusts
An inter vivos trust, also known as a living trust, is a trust agreement that takes effect during a person`s lifetime. With an inter vivos trust, an individual can transfer their assets to a trustee and name beneficiaries who will receive the assets after they pass away.
Inter vivos trusts are often used to provide for family members or to support charitable causes. They can also be used to help manage assets during a person`s lifetime, such as in cases where the individual is unable to manage their own affairs.
Testamentary trusts
A testamentary trust is a trust agreement that takes effect after a person passes away. With a testamentary trust, an individual can name a trustee who will manage their assets and distribute them to beneficiaries according to the terms of the agreement.
Testamentary trusts are often used to provide for family members, especially children or grandchildren. They can also be used to provide support for a spouse, or to support charitable causes. Testamentary trusts can be particularly useful in cases where an individual has minor children or beneficiaries who are not yet mature enough to manage their own finances.
Conclusion
Trust agreements are an essential part of estate planning in Canada. They offer people the ability to manage their assets and provide for their loved ones after they pass away. With a trust agreement, an individual can determine exactly how their assets will be managed and distributed, providing greater flexibility and control than other estate planning techniques. Whether an inter vivos trust or testamentary trust, these agreements provide peace of mind that assets will be transferred according to the individual`s wishes. Consult with your legal and financial advisors to determine the best type of trust agreement for your specific circumstances.