Came across posting on this subject from our Estate Planning association
gets one thinking
first the picture should be of an older version, these fellows are most likely under 65
let's try , even I am not eligible at time of writing for a AET and will be decades before a JPT is possible
And researching , quick summary
A Joint Partner Trust (JPT) is a specialized, living estate-planning trust available to Canadian residents aged 65 and older. It allows couples to transfer assets into a trust for their mutual benefit during their lifetimes. [1, 2, 3]
Key Benefits
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- Bypass Probate: Assets transfer directly to beneficiaries upon the death of the surviving spouse without going through the public, often costly probate process.
- Tax-Deferred Transfers: You can roll your personally held assets into the trust at their Adjusted Cost Base (ACB), meaning no immediate capital gains taxes are triggered when the trust is funded.
Eligibility & Rules
To establish a Joint Partner Trust in Canada, the following criteria must be met:
- Age Requirement: The settlor (the creator of the trust) must be at least 65 years old.
- Residency: Both the settlor and their spouse (or common-law partner) must be Canadian residents.
- Income & Capital: The trust must stipulate that both partners are entitled to all income generated by the trust before the death of the survivor. No one else can receive or use the capital or income while either spouse is alive.
- Deemed Disposition: Taxes are deferred until the date of death of the lastsurviving spouse, at which point the trust's assets undergo a deemed disposition.
AET research summary
An alter ego trust is a specialized, tax-deferred estate planning tool in Canada. It allows individuals aged 65 or older to transfer capital assets into a trust while retaining full control over them, bypassing probate, and avoiding immediate capital gains taxes.
Lindsay Kenney LLP +2
Key Requirements
To establish an alter ego trust, you must meet the following criteria:
taxlawcanada.com
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- Age: You must be 65 years of age or older.
- Residency:
You (the settlor) and the trust must be residents of Canada.
- Sole Beneficiary: You must be the only person entitled to receive all the income and capital from the trust during your lifetime.
Primary Benefits
Alter ego trusts offer several structural and financial advantages for estate planning:
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- Tax-Deferred Rollover: Capital assets can be transferred into the trust at their cost base without triggering immediate capital gains taxes.
- Probate Avoidance: Because assets are held in the trust rather than by your estate, they bypass the probate process upon your death, saving time and potential probate fees.
- Privacy: Trust documents do not become public record, unlike a will that goes through probate.
- Incapacity Planning: You can appoint an alternate or co-trustee to manage the assets if you lose the capacity to do so yourself.
- Estate Distribution: The trust outlines exactly how the remaining assets will be distributed after your death, essentially acting as a will substitute.
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Drawbacks & Considerations
While beneficial, there are certain trade-offs to keep in mind:
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- Cost: Establishing and administering a trust involves initial legal fees and potentially ongoing accounting or management costs.
- Tax Rates: Any income retained within the trust (and not paid out to you as the beneficiary) may be taxed at the highest marginal rate.
- Irrevocability: Once you pass away, the trust becomes irrevocable, meaning the terms cannot be altered by your heirs.
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