Kickstart Your Corporation

Chapter 8The Role of Trusts in Your Financial Plan

The concept of trusts reminds me of Warren Buffett's saying, “Give your children enough so they can do anything, but not so much they can do nothing.”

This is a real dilemma for many professionals, as most of them do not come from “lucky womb syndrome,” where you are born into wealth and happen to have a last name like Buffett or Rockefeller—or, in Canada, Irving, Thomson, or even some high-profile politicians.

Instead, most professionals in Canada studied and ground it out and continue to grind it out for every last dollar. As a result, they can expect to leave their children a much larger estate than what they received, and with that financial legacy comes a lot more responsibility.

In the financial world, trusts have been around for hundreds of years, and there are many types of trusts out there—immigration trust, health and welfare trust, charitable remainder trust, bare trust, age 40 trust, life insurance trust, blind trust, Henson trust, family trust, spendthrift trust, real estate investment trust, joint survivor trust, alter ego trust, spousal trust, and more. In and among those you can have an inter vivos (living) trust or a testamentary trust (upon instructions in your last will and testament after your death); and within those categories you can have discretionary, non-discretionary, revocable, and irrevocable trusts.

For the purposes of this chapter we will look at how trusts can be part of a plan to achieve an ...