If you have spent any time thinking about what you want to happen with your estate after your death, you may have considered the possibility of holding some or all of your estate in a trust. When are trusts most often used in wills?
You Are Intending to Benefit a Minor Child In Your Will
If a minor receives an inheritance, they will not be able to access it unless it is either very small or held in a trust. If the terms of the will do not provide for a trust for minor beneficiaries, the inheritance may have to be paid into court and held on trust (and invested) by a government office called the Accountant of the Superior Court of Justice. The beneficiary or his or her legal guardian would have to make formal requests for funds to that office and at the age of 18, they would receive all the remaining funds outright. If you provide for the minor’s funds to be held in trust in your will, you can decide: who will be the trustee, what kinds of expenditures the trust should make, at what age the child will receive some or all of the funds (ie. You could select an age older than 18, if you thought that age was too young).
You are Intending to Benefit a Person Who Receives ODSP
If a beneficiary is receiving ODSP benefits, an outright inheritance may disqualify them from receiving some or all of the benefits, depending on the amount and type of asset received. There is a special type of trust (commonly called a “Henson” Trust) that is often recommended in this situation. If this trust is put in place in the will of the testator, the beneficiary can maintain their ODSP benefits without disruption. It is important to note that if the will does not provide for a Henson Trust, the beneficiary cannot place his or her own inheritance into a Henson Trust.
You Want to Control What Happens to the Inheritance After a Beneficiary’s Death
Sometimes couples will want to provide that the surviving spouse obtains the use of all or some of the assets during his or her lifetime, while also ensuring that the asset(s) are ultimately passed on to an agreed upon beneficiary or beneficiaries. An outright gift to a surviving spouse means that they can change their will after the death of the first spouse in order to benefit some other individual(s). To avoid this, the will can provide that some or all of the assets are held in trust for the surviving spouse during his or her lifetime and then distributed to the beneficiaries after the surviving spouse’s death.
You Want to Control the Beneficiary’s Spending
Sometimes, a testator feels that a beneficiary will not make good use of an inheritance if they receive it outright. In that case, the funds can be held in trust for the benefit of the spendthrift beneficiary and restrictions as to amount or type of expenditure can be specified.