There are many ways in which one can protect their family’s future and well-being. Today, MLK Law experts will guide you through the benefits of having a Spousal Trust.
Testamentary Trust
Testamentary trust, also known as will trust, is a trust which arises upon the death of an individual, under the terms of the deceased’s will. Testamentary spousal trust contains direct orders on how the capital or income should be distributed in the future. Although, trust under a will will now be taxed at top marginal rates, still there remain very good reasons, unrelated to tax planning, for using this type of trust.
There are many known cases in which this type of trust has been used as family law protection, that protects the settlor from divorce.
Testamentary trust can be quite beneficial if it qualifies as a spousal trust, as it can be used to postpone capital gains tax.
Spousal Trust
As mentioned above, a spousal trust is a form of a testamentary trust, that clarifies that earned income of the assets will be paid to surviving spouse.
Spousal trust is an agreement, between the settlor and settlor’s spouse or common-law partner, which indicates that they are the only two people who have disposition rights of any income or capital of the trust before the later of their deaths.
Benefits of Spousal Trust
Spousal trusts are common in our modern society, especially when a successful and established business is involved. Here are some of its benefits:
- When spousal trust becomes operative, the surviving spouse is entitled to obtain capital in the trust. Furthermore, no one except for the spouse will have the right to dispose assets, capital, and/or gain.
- Spousal trust can have a non-calendar taxation year.
- Spousal trust protect the capital for the benefit of the will-maker’s children in the event of a second marriage.
- Spousal trusts protect the deceased spouses’ capital from exposure to potential creditors of the surviving spouse.
- For many reasons, spouses prefer to sign a spousal trust instead of leaving shares and other assets. By concluding a spousal trust one can protect a business from mismanagement or changes that may imperil welfare and reputation of the business.
- Spousal trust in Ontario grows in popularity every day, because of estate planning. Estate planning is a process in which it is decided what will be done with one’s estate during their life and how it will be divided among their loved ones after their death.
If you are looking for a professional lawyer, who can provide you with all necessary information regarding testamentary and spousal trust, call MLK Law. Our team of leading experts will provide a detailed consultation and will guide you through this legal process from beginning to end.