Garton & Harris

The purpose of a protective trust

Parents in British Columbia may want to make sure that their children will be cared for if something happens to them. Wills provide individuals a way to provide for dependents. If a person dies without a will, his or her estate will be distributed according to provincial law. An additional way to provide for minor children or a spouse is through a protective trust. These kinds of trusts are created to provide a beneficiary with an income.

For example, a protective trust could provide income to pay for children's needs. The capital in the trust may not be distributed until the children reach the age specified in the document. Such a trust can also be used to provide income for a spouse or an adult who is not able to manage his or her own personal affairs. If a trust is established, it will need to be administered by a trustee. The person who creates the trust can designate a trusted relative, professional or friend to serve as the trustee.

An estate planning lawyer can evaluate a person's assets along with their concerns and wishes for their children. No two families are alike so each estate plan will be unique. The first step may be to list all assets, including real estate, retirement accounts, savings, and personal items such as jewelry.

Once all assets have been accounted for, each one, or a portion of each can be designated for a particular beneficiary. Then, a protective trust can be set up to provide for minor children until they reach a specified age.

Source: Canadian Red Cross, "Will Planning Guide", November 09, 2014

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