Inter vivos trust

Inter Vivos Trusts

Properly structured trusts are useful tools for achieving your tax and non-tax objectives.

Inter vivos or family trusts can be used in Tax Planning to maximize the amount of after-tax cash that remains in your hands and in Estate Planning for tax and non-tax purposes.  Lawyers at Granville Law Group have been creating trusts for clients for many years to achieve clients’ objectives.

Tax objectives

Inter vivos trusts are taxed at the highest tax rate applicable to individuals, but distributions made to a beneficiaries (who are presumably in a lower tax bracket) are deductible to the trust, if properly made. That attribute is very important.  For example, a family trust can be a shareholder of a corporation, which may allow a business owner to achieve tax benefits, including:

  • Income splitting, subject to TOSI (tax on split income) rules which apply after 2018 taxation year, for income to be distributed to beneficiaries in lower tax brackets, resulting in lower overall tax liability;
  • Multiplying the Lifetime Capital Gain Exemption, sheltering the gain on sale of certain private company shares, resulting in substantial tax saving;
  • Avoiding probate and probate fees, preserving confidentiality, avoiding probate expenses and delays.
Non-tax objectives
  • Flexibility for transition of the ownership of the business to the next generation, because shares may be distributed to beneficiaries in a future and in proportions that trustees will determine,
  • Asset management and protection; the trustees are given a discretion to make decisions about distribution of the assets of the trust over time once the circumstances evolve and change, rather than immediately at the date of death. It is also often difficult for the creditor to attack the beneficiary-debtor’s interest in a discretionary trust because the value of that interest is not set and depends upon decisions of the trustees,
  • Avoiding wills variation claims restoring the testamentary freedom, and
  • Providing for disabled beneficiaries: trusts can be structured so that not to disentitle the disabled person from receiving provincial disability benefits, including non-monetary benefits.

 You can find additional information on our blog.

We will analyze your circumstances and identify the best ways to protect your interests. Call us at 604-669-6580 or arrange a free, 30-minute consultation using our contact form

Frequently Asked Questions

1. What is an inter vivos trust?

An inter vivos trust is an agreement between the settlor (a person establishing the trust) and the trustee (a person that agreed to manage the trust’s assets) for the management of the trust property for the benefit of the beneficiaries. The inter vivos trust is established during the settlor’s lifetime.

2. How does an inter vivos trust differ from a testamentary trust?

Unlike a testamentary trust, which is created through a will and takes effect after death, an inter vivos trust is active during the settlor’s lifetime.

3. Can an inter vivos trust be revoked?

Yes, inter vivos trusts can be either revocable or irrevocable, depending on how they are set up.

4. What are the benefits of setting up an inter vivos trust?

Benefits include avoiding probate, naming specific beneficiaries, maintaining privacy and continuity of management of the assets.

5. How does an inter vivos trust help in estate planning?

It allows for smooth asset management and ensuring your wishes are carried out without probate.

6. Who should consider setting up an inter vivos trust?

Individuals who want to manage their assets efficiently during their lifetime and ensure their estate is handled privately after death should consider this trust.

7. What are the privacy advantages of an inter vivos trust?

Inter vivos trusts are not subject to public probate proceedings, keeping your estate’s details private.

8. Can I make changes to an inter vivos trust after it’s created?

If the trust is revocable, you can modify or revoke it during your lifetime.

9. What is the role of a trustee in an inter vivos trust?

The trustee manages the trust’s assets according to the settlor’s instructions for the benefit of the beneficiaries.

10. How do I establish an inter vivos trust with Granville Law Group?

You can establish an inter vivos trust by consulting with Granville Law Group’s legal experts, who will guide you through the process of setting up the trust according to your needs.