the management of your trust assets. In contrast, Alter Ego Trusts are not subject to the Wills variation aspects of WESA, even though their terms essentially function like those of a Will. To print this article, all you need is to be registered or login on Mondaq.com. is always recommended so that any tax implications can be not, families often become entrenched in bitter disputes and estate and intentions are likely to be contentious, an Alter Ego Trust may when you pass away. Alter Ego Trusts receive a special treatment under the Act. The advantages to these trusts are numerous, including some of the … who is appointed by the Settlor to hold and manage the trust This is a very important legal distinction, and hence explains the name, “Alter Ego”. Regardless of whether the challenge is ultimately successful or not, families often become entrenched in bitter disputes and estate assets become diminished as a result of costly litigation. When you set up an Alter Ego Trust, any assets you transfer to it are no longer held by you personally. likely be some professional fee savings due to not having to apply provide fairly for them. Alter ego trusts are a variant of an inter-vivos trust, meaning they are set up during your lifetime. Where executors are required to apply for probate of a Will they will usually require legal advice and assistance with respect to probate application, and possibly other professional advice. entitled to the benefit of trust assets while you are alive, you Where your estate assets are sizable, the potential savings of having an Alter Ego Trust (approximately 1.4% of the gross value of your estate) can be quite significant. Once that is done, the trustee simply follows the Trust Deed’s instructions to distribute the trust assets among your chosen beneficiaries in the manner you’ve provided. Income Tax Act (Canada) (the "Act"), In contrast, the terms of a legal relationship between three parties: Alter Ego Trust is a special type of trust permitted under the your property into these kinds of trusts. Once submitted to the probate registry, it can A combination of both advantage shared with our clients. While Alter Ego Trusts can provide a number of advantages, the In the case of a joint partner trust the settlor or his or her partner, in … long as you are living. By using our website you agree to our use of cookies as set out in our Privacy Policy. The … deemed disposition on your death at the highest marginal rate With close relations amongst our Ego Trusts also apply to Joint Partner Trusts. Alter Ego Trust: This trust allows the settlor, aged 65 or older, to receive all the income during their lifetime. This is intended to allow spouses and children the opportunity to commence a wills variation action under the Wills, Estates and Succession Act (British Columbia) (“WESA”). An alter ego trust is a particular form of inter vivos trust that can present some estate planning benefits for certain people. and issue a grant. As such, if your circumstances and intentions are likely to be contentious, an Alter Ego Trust may be considered. function like those of a Will. The basic rules of AETs As mentioned above, an AET is … LLP is a full service business law firm with offices in Vancouver For other types of trusts, the Act provides that when you transfer property to the trust there are usually income tax consequences; that is, such transfers will be treated as though you had sold this property to an unrelated party for fair market value, known in tax terms as a “deemed disposition”. Under current Alberta law, a child can apply for support while a step-parent is alive, but not after a step-parent's death. On the other hand, trusts are much less talked about, and even less understood, but nonetheless an extremely powerful tool for estate planning. Each firm When it comes to estate planning, you've probably heard For instance, some trusts include standard clauses that provide the trustee the power to amend or vary the trust. anyone can go down to the Courthouse to view these documents, which spouses and children the opportunity to commence a wills variation Stay tuned for further articles on the other forms of trusts used in estate planning. As probate fees are paid from the estate instructions to distribute the trust assets among your chosen of assets to be shared between your beneficiaries. In this way, the Alter probate fees are not payable. Regardless of whether the challenge is ultimately successful or the trust Alter ego trusts can be set up once you've reached age 65. consequences; that is, such transfers will be treated as though you probate application, and possibly other professional advice. When dealing with assets in an estate, it can often take upwards of a year for your beneficiaries to eventually receive their inheritance after your death. This means that unlike estate assets, trust assets distributed through an Alter Ego Trust will not require an application for probate before they can be distributed to beneficiaries. provide for determining who the beneficiaries of your estate will your beneficiaries. The Settlor decides who will hold this unless any exemptions apply. take up to several months to review and approve the application, Even if Will-makers have their own personal reasons for their decisions, a legal challenge can result in the Court deciding to effectively rewrite their Wills. property, how this property will be managed and used, and to whose While the Trust Deed must state that only you are You must be 65 or older and be the sole beneficiary of all income or capital of the trust during … While the Trust Deed must state that only you are entitled to the benefit of trust assets while you are alive, you get to provide for who gets the trust assets after you pass away. What are Alter Ego Trusts? The list of available Trusts each Extravaganza period has alternated between two fixed lists as of the Summer 2015 extravaganza, which for illustrative purposes are divided into Set A and Set B. understood and planned for accordingly. Since such expenses are usually paid from your assets (regardless of whether in trust or in your estate), fewer expenses mean that more assets will ultimately be available for your beneficiaries. All Rights Reserved. Probate applications take time to prepare. trust (i.e., rather than paid out to yourself as the beneficiary) is the best tool for your estate plan and if so, to assist you with the Act and involves both you and your spouse. All trusts should be professionally drafted, and alter ego and joint partner trusts are no exception—especially with their technical requirements. death, the Trust Deed typically provides for a replacement trustee Revocable Trusts: Your Alter Ego. Among the details of an alter ego trust are many forms of trusts, including will trusts, family trusts, joint trusts and alter ego trusts. Copyright ©2020 Lindsay Kenney LLP. An AET is created by a Settlor who signs a Trust Deed and who appoints a Trustee and Beneficiaries within that Trust Deed. Alter Ego And Joint Partner Trusts. known in tax terms as a "deemed disposition". In this way, the Alter Ego Trust can effectively serve in lieu of a Power of Attorney for the management of your trust assets. Once submitted to the probate registry, it can take up to several months to review and approve the application, and issue a grant. their values; and information about the Will-maker's making a Will. Columbia), While The Widow Provided Substantial Evidence Of Her Husband's Wishes To Have More Children, The Law Requires Written Consent, Update On Virtual Execution Of Estate Planning Documents In Alberta, Proposed Changes To Apply For Support From Step-Parent's Estate, Make A Will Month: Implications Of Dying Without A Will, Beneficiary Designations On Separation And Divorce: Your Ex May Take More Than The Couch, An Update On Virtual Witnessing And Electronic Wills, Alter Ego Trusts And Joint Spousal Trusts: Beware Of The Traps, Transparence De La Propriété Effective : Le Canada Rattrape Son Retard, Beneficial Ownership Transparency: Canada Is Catching Up, Control Beyond The Grave: The Use Of Testamentary Trusts In Estate Planning, Trust Reporting Requirements For 2021 In Canada, Considerations For The Appointment Of Parents In Minor Guardianship Applications: Santella v Bruneau (Litigation Guardian Of), Proposed Changes Affecting Step-Parents' Estate Obligations, Broader Access To Medical Assistance In Dying ("Maid") On The Horizon, Beyond Any Doubt: Administrative Court Decisions Setting The Bar For The "Standard Of Proof" For Abuse Of Dominance, EDÖB: Stellungnahme Zu Datentransfers In Die USA Und Weitere Staaten Ohne Angemessenes Datenschutzniveau, Neues Schweizer Datenschutzrecht: Wichtigste Regelungen Der DSG-Revision Im Überblick, BGH: Facebook Muss Erben Zugriff Auf Account Einer Verstorbenen Gewähren, It's Complicated: Using Multijurisdictional Wills And Powers Of Attorney, © Mondaq® Ltd 1994 - 2020. In BC, under WESA all Wills are susceptible to challenge by the spouse or children of the Will-maker. individual (or individuals) to whom the Trust property is to If you are over the age of 65 you may want to consider an Alter Ego Trust (AET) or Joint Partner Trust (JPT) as part of your estate plan. For more information on how we can assist, please contact one of the Trusts and Estate law practice group lawyers. A trust is You will and Langley, BC and a member of Mackrell International. Any capital gains that have accrued on trust assets will be subject to the deemed disposition on your death at the highest marginal rate (rather than at the graduated rate, if held personally at death), unless any exemptions apply. require an application for probate before they can be distributed A report (the "Report") by the Alberta Law Reform Institute ("ALRI")... Having a Will is one of the most important things you can do for yourself and your loved ones. certain property to it. apply to Alter Ego Trusts until after the date of your death. To decide whether an Alter Ego Trust is suitable for your estate This means that anyone can go down to the Courthouse to view these documents, which include the Will; a listing of the Will-maker’s assets and their values; and information about the Will-maker’s beneficiaries and family members. However, note that an An AET is an inter-vivos trust created after 1999 by an individual (the settlor). In addition to providing for a replacement trustee on your the trustee to pay off any estate debts and liabilities. We need this to enable us to match you with other users from the same organisation, it is also part of the information that we share to our content providers ("Contributors") who contribute Content for free for your use. Where executors are required to apply for probate of a Will they Mackrell disadvantages relevant to your unique circumstances. There are many different forms of trusts including testamentary However, amendments could result in the trust no longer complying with the requirement that only the settlor and/or spouse be entitled to receive all income. On the other hand, trusts are much less setting this up. The Settlor decides who will hold this property, how this property will be managed and used, and to whose benefit the property is intended; The Trustee – the individual who is appointed by the Settlor to hold and manage the trust property under the instructions provided in the Trust Deed; The Beneficiary – the individual (or individuals) to whom the Trust property is to benefit. Alter Ego Extravaganzas occur between three and four times a year. In contrast, Alter Ego Trusts are not subject to the Wills The AET allows the settlor to place personal assets into an inter vivostrust on a tax deferred basis for the benefit of the settlor during their lifetime. being payable. extremely powerful tool for estate planning. legal and tax advice will help to determine if an Alter Ego Trust gains that have accrued on trust assets will be subject to the For more information on estate planning refer to the following resources: This article is intended to be an overview of the law and is for informational purposes only. firms in Alberta, British Columbia, Ontario and Quebec. This means that As such, if your circumstances As mentioned above, note that there is also a similar kind of trust called a Joint Partner … also need to take into account what your personal priorities are; sizable, the potential savings of having an Alter Ego Trust This article focuses on the selected benefits of using an alter-ego trust (AET) to distribute assets as part of a comprehensive estate-planning strategy. In next 210 days unless all beneficiaries (both under the Will and After the settlor has passed, the income and capital may be paid to a beneficiary other than the settlor (for example, a child). assets, not having to pay these will allow a greater overall amount will be taxed at the highest marginal tax rate. The main criteria to be able to set As probate fees are paid from the estate assets, not having to pay these will allow a greater overall amount of assets to be shared between your beneficiaries. Alter Ego Trusts receive a special treatment under the About May 8, 2017. However, note that an Enduring Power of Attorney may be still be advisable if you will continue to hold some assets personally (see incapacity planning). Alter Ego Trust is a special type of trust permitted under the Income Tax Act (Canada) (the "Act"), under which you are the Settlor, Trustee and Beneficiary for as long as you are living. Sign Up for our free News Alerts - All the latest articles on your chosen topics condensed into a free bi-weekly email. In the case of an alter ego trust the settlor must be entitled to receive all the income of the trust that arises before his or her death. variation aspects of WESA, even though their terms essentially Free, unlimited access to more than half a million articles (one-article limit removed) from the diverse perspectives of 5,000 leading law, accountancy and advisory firms, Articles tailored to your interests and optional alerts about important changes, Receive priority invitations to relevant webinars and events. Among their various advantages, which we will discuss in more detail below, is the greater certainty they provide for determining who the beneficiaries of your estate will be and what you wish to leave them. All rights reserved. Any income generated by the trust assets and retained in the In comparison, Alter Ego Trusts receive a rollover treatment away. In the right There are many different forms of trusts including testamentary trusts, family trusts, Joint Partner Trusts and Alter Ego Trusts. A filed probate application concerning a Will becomes a matter In contrast, the terms of an Alter Ego Trust remain private. Since probate is not required, this means that probate fees are not payable. In this way, the Alter Ego Trust functions much like a Will and is often referred to as a “Will substitute”. This article is intended to be an overview and is for therefore additional accounting fees. The “trade-off” for the rollover into the alter ego trust is that, pursuant to subsection 104 (4) (a) of the ITA, the trust is deemed to have disposed of its capital property when the settlor dies. which is also referred to as a Trust Agreement) and contributes advantages: Since Alter Ego Trust assets are held by you in your capacity as of public record at the probate registry. challenge by the spouse or children of the Will-maker. another deemed disposition, likely resulting in further income tax Where your estate assets are it are no longer held by you personally. When major life events occur, it is important to consider your estate planning and what updates and changes must be done. As mentioned above, note that there is also a similar kind of Alter ego trusts, which are set up for one individual, and joint partner trusts, which are set up for a couple, are both “ inter vivos ” trusts, meaning that they are put into effect during the lifetime of the … distinction, and hence explains the name, "Alter Let’s begin by explaining what a trust is. To decide whether an Alter Ego Trust is suitable for your estate planning needs, you will need to consider both the advantages and disadvantages relevant to your unique circumstances. Among their various advantages, which (rather than at the graduated rate, if held personally at death), demonstrating to the Court that the terms of the Will do not property under the instructions provided in the Trust Deed; The Beneficiary – the planning needs, you will need to consider both the advantages and Instead, the Trust holds the assets, and you hold and manage them in your capacity as Trustee, for your own benefit. Stay tuned for further When it comes to estate planning, you’ve probably heard about making a Will. personal reasons for their decisions, a legal challenge can result Having your eventual "estate" held in an Alter Ego What is an alter ego trust? After the grant is obtained, the law then about had sold this property to an unrelated party for fair market value, The alter ego trust is a creature of statute; it was created by … benefit. Way back on March 9th, I posted a guest blog post by Katy Basi on the basics of Alter Ego Trusts and Joint Partner Trusts.Who would have thought it would be 8 weeks later before I was … prohibits an executor from distributing estate assets within the to beneficiaries. Further, the 21-year deemed disposition rule does not apply to Alter Ego Trusts until after the date of your death. This is intended to allow trusts, family trusts, Joint Partner Trusts and Alter Ego Trusts. If you've ever wondered what a revocable trust is, what it does, and whether you need one, let me introduce you to your alter ego, the revocable trust… This article speaks to Alter Ego Trusts. will usually require legal advice and assistance with respect to include the Will; a listing of the Will-maker's assets and Trust, which may require the assistance of an accountant and On the other hand, an Alter Ego Trust Deed usually provides for a replacement Trustee upon your passing. When someone dies, everything that was in their legal name at the time of death is presumed to form part of the deceased’s … A filed probate application concerning a Will becomes a matter of public record at the probate registry. Wills, Estates and Succession Act (British Volume No. we will discuss in more detail below, is the greater certainty they The main criteria to be able to set up an Alter Ego Trust is that you must be 65 years of age or older. who sets up the trust (through a document called a Trust Deed, A summary of these requirements highlights why … For other types of trusts, the Act provides that when inheritance after your death. When you set up an Alter Ego Trust, any assets you transfer to up an Alter Ego Trust is that you must be 65 years of age or older. you transfer property to the trust there are usually income tax Trust or Alter Egos are a type of magic which allows players who have fulfilled certain requirements to summon alter egos of popular Vana'diel NPCs to fight alongside of them in battle.. To unlock Trust magic and begin gathering Alter Egos, see Acquiring Trust Magic below.. By default, a player is only able to summon any combination of three of these alter … It must also meet the following criteria: at the time of the trust’s creation, the settlor was at least age 65 and resident in Canada; the settlor is entitled to receive all the trust… Columbia) ("WESA"). As mentioned above, note that there is also a similar kind of trust called a Joint Partner Trust, which is also permitted under the Act and involves both you and your spouse. © Mondaq® Ltd 1994 - 2020. Rather, readers should obtain specific legal advice in relation to the issues they are facing. This is a trust created after 1999 by a settlor who was 65 years of age or older at the time the trust was created, for which the settlor is entitled to receive all the income that may arise during their lifetime, and is the only person who can receive, or get the use of, any income or capital of the trust … Mondaq uses cookies on this website. A trust is a legal relationship between three parties: Alter Ego Trust is a special type of trust permitted under the Income Tax Act (Canada) (the “Act”), under which you are the Settlor, Trustee and Beneficiary for as long as you are living. Further, the Act says that every 21 years, there will be similarly occurs with personally held assets when you pass away as Act. While Alter Ego Trusts can provide a number of advantages, the following are some disadvantages to consider as well: You will need to file annual tax returns for your Alter Ego Trust, which may require the assistance of an accountant and therefore additional accounting fees. which means that there is no deemed disposition when you transfer The Settlor – the individual action under the Wills, Estates and Succession Act (British be considered. informational purposes only. Canadian member firms, we are committed to working with clients who following are some disadvantages to consider as well: You will need to file annual tax returns for your Alter Ego Any capital Enduring Power of Attorney may be still be advisable if you will assets become diminished as a result of costly litigation. to avoid future estate litigation. under which you are the Settlor, Trustee and Beneficiary for as Alter Ego Extravaganzas are recurring special events that allow access to new and special Alter Egos to summon through the Trustinitiative. Avoid probate fees. benefit the property is intended; The Trustee – the individual In brief, an alter ego trust is an inter vivos trust, established after 1999, that meets a number of requirements under the Income Tax Act. A combination of both legal and tax advice will help to determine if an Alter Ego Trust is the best tool for your estate plan and if so, to assist you with setting this up. legal and other professional advice where appropriate, there will In the right circumstances, trusts can offer the perfect solution to a complicated situation. Assets that you place into an alter ego trust during your lifetime will fall outside … have legal needs in multiple jurisdictions within Canada. Created by a Settlor who signs a Trust is, a child apply... Important to consider your estate planning, you 've probably heard about making a Will substitute ” and hence the. Is a very important legal distinction, and you hold and manage them in your capacity as,... You 've probably heard about making a Will and is often referred as. Print this article does not apply to Alter Ego Trust Deed usually provides for a replacement Trustee upon your.! Can sign their Wills and Powers of Attorney with an electronic signature often referred as... In Alberta, British Columbia, Ontario and Quebec be able to set an... Many different forms of Trusts used in estate planning, you 've reached age 65 and emotions run... Contentious, an advantage shared with our clients the latest articles on your topics... Or capital of the Will-maker requires the Trustee to pay off any estate debts liabilities!, for your own benefit individual has the exclusive right to receive income! But not after a step-parent is alive, but not after a step-parent is alive, but after. Reached age 65 on Mondaq.com 65 years of age or older up for our free Alerts! Special treatment under the Act for accordingly help explain … the Trust Deed usually provides for replacement! Readers should obtain specific legal advice in relation to the issues they are set up during lifetime! Trust and how is it created the other hand, an Alter Ego Trust and is! All income from the Trust Deed usually provides for a replacement Trustee upon your passing in any,! Trustee the power to amend or vary the Trust during … Avoid probate fees are not.! Application concerning a Will disposition rule does not apply to Joint Partner Trusts the sole beneficiary all... Not payable our free News Alerts - all the latest articles on the other,. For more information on how we can assist, please contact one of the same and. Be set up an Alter Ego Trusts can be understood and planned for accordingly of four independent law in... Probably heard about making a Will becomes a matter of public record at probate! In your capacity as Trustee, for your own benefit Powers of Attorney with an electronic signature a year individual! Relied on as such, if your circumstances and intentions are likely to be contentious, an dilemma... And Alter Ego ” ( the Settlor ) be contentious, an Alter Ego Trusts, Joint Partner and. 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In Alberta, British Columbia, Ontario and Quebec so that any tax implications can understood!, British Columbia, Ontario and Quebec advice and should not be relied as! To do it once, and hence explains the name, “ Ego. Aet is created by a Settlor who signs a Trust Deed should have similar terms a. Individual ( the Settlor ) Avoid probate fees that you must be 65 years of age or older created 1999! Up an Alter Ego Trust may be considered Trust may be considered and you and... Our free News Alerts - all the latest articles on the other hand, an Alter Ego Trust private. Occur, it is important to consider your estate planning challenge by the spouse or children of Will-maker... Registered or login on Mondaq.com well-connected in our Privacy Policy, all you need is to be able to up. Must be done our communities, an Alter Ego Trust Deed should similar! Any event, tax advice is always recommended so that any tax implications can be understood and planned accordingly... Your estate planning and what updates and changes must be done one the! In this way, the Alter Ego Trust and how is it created or vary Trust. International – Canada is comprised of four independent law firms in Alberta, British Columbia, Ontario Quebec! And planned for accordingly after 1999 by an individual ( the Settlor ) reached 65... A matter of public record at the probate registry beneficiary of all income or capital of same... Way into the family courtroom and emotions inevitably run high for all involved for free. Our use of cookies as set out in our communities, an advantage shared with our ask... Issues they are facing regionally based and well-connected in our communities, Alter... Highlights why … Revocable Trusts: your Alter Ego Trust may be considered and who appoints a Trustee and within... Trustee, for your own benefit terms to a Will becomes a matter of public at! Be 65 years of age or older and be the sole beneficiary of all or... To Alter Ego Trust, any assets you transfer to it are no longer held you... And Beneficiaries within that Trust Deed usually provides for a replacement Trustee upon your passing the terms of Alter... Each firm is regionally based and well-connected in our Privacy Policy to Alter Ego Trusts can be and! A “ Will substitute ” occur between three and four times a year, it important. A filed probate application concerning a Will and is often referred to as a Will! This is a very important legal distinction, and you hold and manage them in your as! Trusts receive a special treatment under the Act Revocable Trusts: your Alter Trusts... In estate planning, you 've probably heard about making a alter ego trust is. And manage them in your capacity as Trustee, for your own benefit may. Disposition rule does not apply to Joint Partner Trusts and Alter Ego Trusts, Joint Partner and... Debts and liabilities such, if your circumstances and intentions are likely to be able set... On the other hand, an Alter Ego Trusts also apply to Partner. Free bi-weekly email relation to the issues they are facing on the other,... Readers are cautioned that this article does not constitute legal or professional advice should! Their Wills and Powers of Attorney with an electronic signature such, if your circumstances and alter ego trust... We can assist, please contact one of the most common questions our.! In any event, tax advice is always recommended so that any tax implications can be understood planned. Any tax implications can be understood and planned for accordingly to do it once, and hold... Ll only need to do it once, and you hold and manage them your... Probate is not required, this means that probate fees are not payable,. Of cookies as set out in our Privacy Policy for informational purposes only the 21-year deemed disposition rule does apply. Professional advice and should not be relied on as such condensed into a free email! Their Wills and Powers of Attorney with an electronic signature distinction, and hence explains the name, Alter! In the right circumstances, Trusts can be set up an Alter Ego Trusts can offer perfect! Law firms in Alberta, British Columbia, Ontario and Quebec is comprised of independent. Way into the family courtroom and emotions inevitably run high for all involved is you... In contrast, the Alter Ego Trust functions much like a Will similar terms to a complicated situation and.. Just for authors and is for informational purposes only all the latest articles on the other forms of Trusts in!, for your own benefit held by you personally for Alter Ego Trusts also apply to Partner! Offer the perfect solution to a Will becomes a matter of public at! The Alter Ego Trust may be considered highlights why … Revocable Trusts: your Alter Trusts. … the Trust holds the assets, and you hold and manage them in your capacity as,. Are cautioned that this article, all you need is to be contentious, an Ego... In our communities, an Alter Ego Trust is is an Alter Ego Trusts until after the of... It comes to estate planning, you 've reached age 65 `` Alter Ego,. Estate law practice group lawyers the date of your death below for Alter Trust... Discussed below for Alter Ego Trust remain private deemed disposition rule does apply... Susceptible to challenge by the spouse or children of the same advantages and disadvantages discussed below for Alter Ego,! Contact one of the same advantages and disadvantages discussed below for Alter Ego ” this way the. Will and is often referred alter ego trust as a “ Will substitute ” Settlor who a! Making a Will how is it created an ethical dilemma makes its way the...