Trust and Estate Tax Planning in Calgary You Can Count On

Each passing year, the laws, bylaws, and tax structures surrounding estates and trusts become more complicated. The complexities and seriousness of making trust and estate tax plans make it difficult for individuals and families to plan their future and all the “what-ifs” that may pop up along the way. 


By working with a chartered professional accountant experienced in the field of trust and estate tax planning, Calgary families gain the resources and information they need to make informed decisions. With a sound trust and estate tax plan in place, you will be able to live with a clear mind, knowing your family and interests will be cared for long after you’ve passed on the baton. Together, we can formulate an estate and trust plan that takes into account your spouse, children, grandchildren, and others who you would like to share part of your legacy with. 


If you’re new to the concepts that go into trust and estate tax planning, our Calgary accountants have defined some common terms you may encounter along the way. 


What is an Estate?

A trust is the total combined property and assets held by an individual. It is typically only referred to as an “estate” once the person has passed on. 


What is a Trust?

A trust is essentially a legally binding agreement that involves three parties. There’s the “trustmaker”, the “trustee”, and the “beneficiary” (or “beneficiaries”). Let’s go a bit deeper in defining these terms:

  • Trustmaker — Trustmakers are sometimes referred to by other terms, such as settlors, grantors, testators, and trustors. A trustmaker is the creator of the trust agreement, and the person who is transferring their estate into the care of the trustee. 
  • Trustee — The trustee acts as an intermediary between the trustmaker and the beneficiary. This term is easy to recall by remembering that a trustee is entrusted with managing the assets contained within the trust. 
  • Beneficiary — The beneficiary (or beneficiaries) are the people, organizations, or entities that will eventually receive or share the assets of a trust. 


The Types of Trusts

You can avoid some of the legal and tax pitfalls associated with trusts by understanding the various trusts, and how each type of trust operates. There are actually several types of trusts, including living trusts, revocable living trusts, as well as irrevocable living trusts. Knowing whether you are set to receive assets from a revocable or irrevocable trust can have significant tax and legal implications. In this section, we will generally explain how some of the most common forms of trusts work. 

  • Living Trust
    Sometimes called an “inter vivos” trust, a living trust is formed and can be put to use while the trustmaker is still alive. There are several types of living trusts, including: 
    • Revocable Living Trust — Within a revocable living trust, the trustmaker usually serves as the trustmaker and trustee, giving them control over the assets placed into the trust. One benefit of choosing a revocable living trust is to avoid the hassle and cost of probate. Plus, the trustmaker can revise the terms of the trust up to the point of their death.

      The trustmaker within a revocable living trust may also act as beneficiary. This allows for their care if they should become mentally incapacitated. 
    • Irrevocable Living Trust — An irrevocable living trust allows the beneficiaries of the trust (typically the next generation within a family) to enjoy the assets of the trust. In most arrangements, the trustmaker does not serve as trustee and irrevocably (or irreversibly) loses their claim to the estate once it is placed under the care of the trustee. 
    • Irrevocable Life Insurance Trust — This type of trust only holds a policy, insuring the life of the trustmaker. Since this life insurance policy is owned by the trust, it is typically excluded from the overall value of the trustmaker’s estate once they pass on. 
  • Testamentary Trust
    A testamentary trust is likely what you think of when you hear the terms “wills and estates”; this is the type of trust where the assets are only moved into the trust following the execution of the deceased’s estate, as revealed through his/her last will and testament. It is the will that names an estate executor and describes how the assets should be disbursed. Since the trustmaker of the will can’t always predict their own future mental state, a successor trustee may be named to follow the trustmaker’s intent. Naming a successor trustee will typically help families avoid the hassle of working with a court-appointed conservator or guardian. 


Speak with a Trust and Estate Tax Expert

There are numerous types of trusts not mentioned on this page, such as spendthrift trusts, disabled beneficiary trusts, and many others that come with their own tax implications. If you are looking for a customized trust arrangement to minimize your family’s taxable obligations, we can help accommodate your request. Contact Masone and Company to schedule a meeting with a will and estates tax accountant.

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Masone and Company

About Masone and Company
B Comm., DPA, I.C.I.A., MFA. , CPA CMA, CGA

We specialize in accounting, tax, and bookkeeping services. Our clients always receive services from seasoned professionals, who take a global view of their firms and then analyze how we can save them money.

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103-2308 Centre St N
Calgary, AB T2E 2T7


Phone: 403-204-1544
Fax: 403-204-1545


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Monday – Saturday
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Email:
tmasone@masoneandcompany.com

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