Alter Ego Trusts

An “Alter Ego” or “Joint Spousal Partner” Trust is a relatively new tool that has become available as a result of amendments to the Income Tax Act.

An Alter Ego Trust is a specific type of trust that is created within the parameters of certain rules outlined in the Income Tax Act.  For example, the Settlor (the person who is creating the trust), must be over 65 years of age and can be the only beneficiary to the income and capital of the trust during his or her lifetime.

As with any trust, by creating an Alter Ego Trust an individual may, subject to certain requirements of the Income Tax Act, designate who will benefit from the assets following his or her death.  However, with an Alter Ego Trust, it is created in an inter vivos fashion, during the lifetime of the Settlor.  But, unlike an inter vivos trust, it does not result in the automatic triggering of a disposition and the resulting tax at the time of creation.  Instead, tax can be deferred until the date of death of the Settlor and in this respect, more closely resembles a testamentary trust. 

As a result of these specific changes to the Income Tax Act, the Alter Ego Trust can be utilized to avoid the costs of probate yet still impose discretion or direction on the disposition of assets following an individual’s death.  At the same time, the Alter Ego Trust is a private document and can be utilized to preserve wealth and shield assets from creditors and marital breakdown at the present date, rather than after one’s death. 

If you have any questions about utilizing an Alter Ego or Joint Spousal Trust to achieve the benefits outlined above, please contact one of our solicitors to arrange a meeting at your convenience.