Alter Ego Trusts & Joint Spousal Trusts

EXERCISE MORE CONTROL OVER YOUR ASSETS AND FUTURE TAX LIABILITIES

An Alter Ego Trust (for single individuals) or Joint Partner Trust (for married or common law partners) can provide significant benefits depending on your personal circumstances. Known as “inter vivos” trusts, both of these types of trusts are created during your lifetime — you transfer your assets into the trust while alive, and they are then passed to your intended beneficiaries according to the terms of your Alter Ego or Joint Partner trust document.

The Benefits Of Alter Ego Trusts & Joint Spousal Trusts

Having an Alter Ego Trust (‘AET’) or Joint Partner Trust (‘JST’) are types of life interest trusts that can provide significant benefits by moving your assets into a trust rather than having your assets pass through your estate. Assets held in the trust will not need to undergo the probate process, which can often take well over a year, and they also do not incur any probate fees. Additionally, an AET or JST provides privacy regarding your personal affairs, whereas probate filings are public. AETs and JSTs also permit more seamless continuity of asset management. For example, you can’t sell a house that is awaiting probate unless the buyer is willing to wait on its completion; yet a house in an AET/JST can be disposed of immediately. AET or JSTs can also be used to head off potential wills variation claims (challenges to the distribution of your desired assets under your will).

    • An Alter Ego Trust can be created by a Canadian 65 years of age or older. 

    • A Joint Spousal Trust can be created by a Canadian couple if at least one spouse is 65 or older.

    • If the primary purpose of the AET/JST is to avoid probate fees, they are generally only recommended to persons who have estates of at least $2m.  

  • Setting up an alter ego or joint spousal trust initially costs more than creating a will. However, the savings in probate fees can make it a more cost-effective solution. These trusts can also be complex to set up and maintain and may need to file annual tax returns, so you’ll want to seek professional legal guidance from both your tax advisors and legal counsel.

  • An Alter Ego trust is created for a single person. A Joint Partner Trust is for married or common law couples.

FAQs

Need Guidance Creating an Alter Ego or Joint Partner Trust?

When it’s time to protect the future of your assets with an Alter Ego or Joint Partner Trust, Parr Business Law can help. Our lawyers can advise you on establishing a trust that will protect your assets, reduce estate taxes, and ensure your loved ones are taken care of after you die. Schedule a consultation call today to find out if a trust is the best option for you.

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