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Setting up a trust can be baffling

When you are setting up an estate plan, one of the likely activities you will engage in is setting up a trust. What is a trust? A trust is a legal relationship that allows the trustee, whom you name, to hold interest in money, property and other assets for another person's benefit. This person is the beneficiary. You will probably want to name the trustee in a written document called a will. There can be multiple trustees and multiple beneficiaries, too.

If you are confused, don't worry. Legal representatives can advise you and help you transfer funds so that your trust is watertight and unambiguous in a court of law.

There are two types of trusts: discretionary and non-discretionary. You need to understand that these two trusts are dealt with differently by the British Columbia Employment and Assistance (BCEA) legislation.

Discretionary trusts makes it impossible for the beneficiary to have any control over the funds held or even how the money is spent. The trustee has total control over the trust and will make decisions for the beneficiary based on his or her needs and his or her perception of the beneficiary's wants and needs.

Non-discretionary trusts is one in which the trustee does not have total authority over how the funds are distributed. The beneficiary has some control and the trustee may be required to make certain payments.

Trusts are set up by transferring property or assets to someone to hold in benefit for someone else. The person holding the property can be you, someone you name or can be several people. You will want this document in writing, although it isn't legally required.

Source: Ministry of Social Development and Social Innovation, "Disability Assistance and Trusts," accessed Aug. 05, 2015

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