Imagine dealing with the death of your spouse.

It is almost too painful to consider. The overwhelming grief, the confusion, navigating daily life after loss, trying to figure out how to move forward financially.

Now imagine learning, amidst all that emotion and heartache, that your spouse’s RRSP would not be going to you.

Despite a Will that said it would.

Despite your many conversations about this very thing.

Despite your spouse’s clear intentions to you before they died.

Despite all of that, because the beneficiary listed on their RRSP was not you, you would not receive a dime. $600,000+ would instead be going to your spouse’s ageing mother, because over a decade previously they had listed her as a beneficiary and never thought to change it.

That really happened to a Halifax woman.

It was devastating. And it was not what her late husband would have wanted. But there was precious little she could do about it.

Are you at risk for something like that happening, too?

That story brought to light the importance of protecting your assets after you die. You likely have thoughts about where you want your assets to go and when - but it is not always as simple as drafting up a Will and listing that out.There are many estate planning misconceptions that can expose family capital to serious risk.

So how can you avoid such risks?

One way to maintain a degree of control of your assets - setting out who gets what benefits and when - is to use a trust. A trust separates the control and management of an asset from its ownership.

There are two types of trusts: inter vivos trusts, and testamentary trusts. Broadly speaking, an inter vivos trust is one that is created while you are still alive. A testamentary trust is created after you pass.

For many of my clients, the idea of setting up a trust while they are still alive to decide on every detail is appealing. It offers a degree of control that is otherwise not possible - and with that comes peace of mind that your loved ones won’t be blindsided after you pass.

So, what benefits are there to creating an inter vivos trust?

An inter vivos trust is essentially deemed to be an “individual”, for the purposes of income tax. That means that the trust will calculate income, file tax returns, and pay taxes. Generally, a trust will pay tax at the top level both federally, and provincially. However, if required conditions are met, income from the trust can be allocated to your designated beneficiaries and taxed in their hands, instead, which means less tax will likely be paid.

There are other benefits, too, depending on the exact nature of the trust you set up:

● Estate simplification: an inter vivos trust can avoid tying assets up in lengthy probate processes and allow for quicker transfer of assets to your beneficiaries.

● Minimising probate tax and fees: assets in a trust are not transferred under the terms of a will, so there is potential that costly fees can be minimised

● Privacy: assets distributed in trust are typically not subject to rules usually applied to wills, so there may be more privacy in the process

How do you know if a inter vivos trust is right for you?

Well, that depends.

Depending on your overall goals while you are alive, who your beneficiaries are and why you want to leave them assets, an inter vivos trust could be a great option.

Estate planning should be part of your current financial plan, because your goals for when you pass can influence what you should be doing while you are alive.

The peace of mind that comes from knowing that your assets will go to who you want, when you want, is priceless.

If you want to know what your options are for protecting your legacy, book a call.