Let’s Connect
Wills & Estates > Trusts

Trusts

Trusts are flexible tools for managing and protecting assets during life and after death. At GBC Law, we advise clients on setting up and administering trusts tailored to their goals.

What is a Trust?

A trust is a legal arrangement where one party (the trustee) holds property for the benefit of another (the beneficiary). Trusts can be created during life (inter vivos trusts) or through a will (testamentary trusts).

Common Types of Trusts

  • Family trusts – For holding and passing on family assets.
  • Spousal trusts – Providing income for a surviving spouse while preserving capital for children.
  • Discretionary trusts – Allowing flexibility in how income and assets are distributed.
  • Special needs trusts – Protecting benefits while supporting individuals with disabilities.

Why Consider a Trust?

  • Protect assets from creditors.
  • Manage wealth across generations.
  • Provide tax planning opportunities.
  • Ensure vulnerable beneficiaries are cared for.

Frequently Asked Questions

What is the 21-year deemed disposition rule?
In Canada, most trusts are subject to the 21-year deemed disposition rule. This means that every 21 years, the trust is considered to have sold and repurchased its assets at fair market value. The rule prevents trusts from holding assets indefinitely without paying capital gains tax. Trustees need to plan ahead to manage these tax consequences.
What is an Alter Ego Trust?
An Alter Ego Trust is a type of trust available to individuals over 65. It allows you to transfer assets into the trust while continuing to benefit from them during your lifetime. On your death, the assets pass directly to beneficiaries without going through probate, which can save time and costs.
What is an irrevocable trust?
An irrevocable trust is one that generally can’t be changed or revoked once it’s set up. The assets placed into the trust are no longer owned by the person who created it. This can provide benefits like creditor protection or tax advantages, but it also means giving up control.
What is a Henson Trust?
A Henson Trust is a type of discretionary trust designed to benefit a person with disabilities. Because the beneficiary doesn’t have direct control over the trust assets, those assets are not counted when determining eligibility for government disability benefits. This allows the beneficiary to receive financial support without losing essential benefits.
Is a trust subject to compliance?
Trusts must comply with Canadian tax laws, including filing annual T3 tax returns when required. New federal reporting rules also require many trusts to disclose detailed information about trustees, beneficiaries, and settlors. Non-compliance can lead to penalties, so it’s important to keep trust administration up to date.