Death and taxes. Long drives and plenty of snacks. Spousal trusts and estate planning.
What do these things have in common? For better or for worse, they go together—and when you plan for them in advance, it’s better for you and your passengers.
When planning your estate, spousal trusts ensure that your spouse or common-law partner will be looked after in the event of your passing, regardless of their capacity, or the demands of other beneficiaries.
Why a spousal trust?
1. Save money!
There are no capital gains on assets transferred to or held in a spousal trust for the duration of the surviving spouse’s lifetime. Probate taxes may be payable upon transfer to the trust, however, they are not payable again on the surviving spouse's death, but rather flow through the trust.
2. Manage how your assets will be used.
Spousal trusts can include conditions that outline specifically how the assets in trust can be used. If there are other trustees who may be managing your assets after you die, this ensures that your spouse can use the assets for their own benefit, separately from other assets managed by your trustees, but the capital value can be protected for your future beneficiaries.
3. Peace of mind for your beneficiaries.
When you create a spousal trust, the assets held in trust remain a part of your estate even after your passing. This means that when your spouse dies, these assets will go to the beneficiaries you have designated, rather than your spouse’s estate. This may be especially important for blended families, or families with children from different marriages: if you want your family home to be used first by your current spouse, and then your children from a prior relationship, your family would benefit from a spousal trust.
Spousal trusts provide additional certainty on how your assets will be managed, and who will benefit from them. To leave your family with the clearest roadmap after your passing, consider reaching out to an estate planning lawyer to investigate whether this strategy is right for you.
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