Preserving wealth with purpose: The role of trusts in estate planning

For many families, financial planning is about more than managing investments or minimizing taxes. It’s about preserving values, protecting assets, and building a legacy that lasts.

That’s where trusts come in. Trusts are versatile planning vehicles that can help Canadians protect what they’ve built, plan for the future and support the people and causes they care about – regardless of their net worth.

Trusts ensure financial decisions reflect both your financial goals and personal values. They can be a great fit in many holistic estate and legacy strategies.

What is a trust?

A trust is a legal arrangement that allows you (the “settlor”) to transfer assets to a trustee, who manages those assets for the benefit of one or more beneficiaries. Think of it as a way to pass along assets with structure and intention, rather than handing them over outright.

Trusts can hold a wide range of assets, including:

• Cash and investments
• Real estate
• Private company shares\
• Insurance proceeds

There are two primary types of trusts used in estate planning:

• Inter vivos trusts (created during your lifetime)
• Testamentary trusts (established through your will and activated after you die)

Each comes with different rules, tax treatments and benefits, depending on your goals.

Why use a trust? 

Trusts can help achieve a variety of financial and legacy goals, especially if you’re planning ahead for long-term wealth protection, tax efficiency, or to navigate complex family dynamics.

Here are some of the top reasons our clients use trusts:

1. Protecting assets for the next generation

One of the most common motivations for creating a trust is to control how and when beneficiaries receive their inheritance. This can be particularly helpful when:

• Your beneficiaries are minors or young adults
• You're concerned about the financial responsibility of your beneficiaries, or about creditor protection
• You want to prevent future spouses or ex-spouses from accessing family wealth

With a trust, you can stagger distributions over time, tie them to milestones (such as age or education), or keep the capital protected while providing income.

2. Reducing taxes and planning efficiently

Trusts can help minimize estate taxes and reduce probate fees, particularly when used as part of an integrated estate freeze or income-splitting strategy.

Certain types of trusts, like joint partner trusts or alter ego trusts, are especially valuable if you're over age 65, offering both tax deferral and privacy by bypassing probate.

3. Supporting a family member with special needs

Families with children or dependents who have disabilities often use Henson trusts or other discretionary trusts to provide long-term financial security without jeopardizing access to government support programs.

4. Preserving family harmony

A trust can help reduce the likelihood of disputes by outlining:

• Who gets what
• Under what conditions
• Who has decision-making authority

This clarity is especially important in blended families or when assets are being divided unequally for valid reasons. Trusts offer a way to respect your intentions while protecting family relationships.

5. Supporting charitable giving

You can use a trust to create an ongoing charitable legacy, such as a charitable remainder trust, which provides income to you or your beneficiaries during your lifetime and donates the remaining capital to a registered charity upon death.

Who should consider a trust?

While trusts are often associated with high-net-worth individuals, they can be a smart planning tool for many Canadians – particularly if you:

• Own a business or multiple properties
• Have complex family structures (e.g., second marriages, children from different relationships)
• Want to preserve wealth across multiple generations
• Care for a vulnerable or dependent family member
• Want to leave a legacy through charitable giving

Trusts are most effective when they’re integrated as part of a comprehensive estate plan and coordinated with your legal and financial advisors.

Creating a trust: What to expect

Setting up a trust involves careful planning and collaboration between your financial planner, lawyer, and tax advisor. We’re here to help you:

• Clarify your long-term objectives and family values
• Evaluate whether a trust aligns with your financial plan
• Coordinate with your legal counsel to draft and structure the trust properly
• Align the trust with your insurance, investment, and estate planning strategies
• Revisit your plan regularly and adjust for changing needs and laws

We can also help you engage your family in the process. This might look like formal family meetings, legacy letters, or educating younger generations about the responsibilities and opportunities of wealth.

A trust is more than a tool – it's a strategy

When you use it wisely, a trust is more than a legal structure. It’s a way to extend your influence, provide for your loved ones and ensure that your hard-earned money is used thoughtfully for years to come.

Whether you’re looking to protect assets, minimize taxes, or create a lasting impact, a trust may be the right tool for your financial journey.

Let’s talk about your legacy

Every family is unique – and so is every estate plan. If you’re wondering whether a trust could support your goals, we’d be happy to walk you through the options and design a strategy that reflects what matters most to you.

Connect with us to start the conversation.