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Trusts are legal arrangements in which one person or entity - the trustee - holds property for the benefit of others - the beneficiaries. In Chestermere, which is in the province of Alberta, trust law is governed primarily by provincial legislation and court decisions, together with federal tax rules. People create trusts for many reasons - to manage assets for children, to protect assets from creditor claims, to provide for family members with disabilities, to structure tax planning, and to carry out a deceased person's testamentary wishes. Trusts can be created during a settlor's lifetime - often called inter vivos or living trusts - or under a will as testamentary trusts that come into effect after death.
Creating or managing a trust involves legal, tax and fiduciary duties that can have long-term consequences. A lawyer can help you draft documents that reflect your intentions and comply with Alberta law, advise on tax implications, and reduce the risk of disputes.
You may need a lawyer if you are setting up a trust to: protect assets for a minor or vulnerable person, reduce estate administration costs, provide for complex family situations such as blended families, or use a trust as part of estate or tax planning. Lawyers also help when you are administering a trust - preparing required accounts, making distributions, dealing with income tax filings, or selling trust assets.
Trust-related disputes commonly require legal representation. Typical issues include allegations of breach of trust by a trustee, requests to remove or replace a trustee, disagreements among beneficiaries, or claims that a trust is invalid. A lawyer experienced in trusts can represent you in negotiations, mediation, or court proceedings in the Court of King"s Bench of Alberta.
If someone lacks capacity and a trust or power of attorney must be used, or if you suspect financial abuse or mismanagement, you should seek legal advice promptly to protect assets and rights.
Trust law in Chestermere follows Alberta provincial rules and common law principles. Key aspects to keep in mind include fiduciary duties - trustees owe strict duties of loyalty, care and impartiality to beneficiaries. Trustees must follow the trust document and act in beneficiaries" best interests.
Provincial legislation guides trustee powers, duties, and procedures for administration and accounting. Courts in Alberta oversee trust disputes and can remove trustees, order accounting, vary trusts in limited circumstances, or resolve doubts about interpretation. The Court of King"s Bench of Alberta is the principal trial court that hears trust matters.
Tax treatment of trusts is federal and administered by the Canada Revenue Agency. Trusts generally must file annual trust income tax returns and follow specific reporting for distributions, beneficiaries" income inclusion, and tax credits. Certain rules apply to testamentary trusts, alter-ego trusts, and family trusts that affect taxation.
Where a settlor or beneficiary is incapacitated, provincial guardianship and incapacity rules apply. The Office of the Public Trustee or Public Guardian in Alberta can become involved when no private decision-maker is available. Family law and creditor-claim rules can also affect trust assets, especially in family breakdown or bankruptcy situations.
A will takes effect only after death and can create testamentary trusts as part of estate distribution. A trust created during life - an inter vivos trust - can operate while the settlor is alive and avoid some probate processes for the assets placed in the trust. Wills must go through probate when required, while many trusts avoid probate for the trust assets, although tax and formality differences remain.
Common trusts include testamentary trusts under wills, inter vivos family trusts for estate planning, joint spousal trusts, trusts for minors, trusts for persons with disabilities aimed to protect eligibility for government benefits, and charitable trusts. Banks and trust companies also act as professional trustees for some estates.
Choose a trustee who is trustworthy, organized and capable of managing finances and legal obligations. Family members can serve as trustees, but professional trustees provide experience and neutrality. Consider the complexity of the trust, potential conflicts among beneficiaries, the need for investment management, and the trustee"s willingness to serve. Discuss compensation, successor trustees, and reporting expectations in the trust document.
Whether a trust can be changed depends on its terms and type. Many inter vivos trusts are revocable while the settlor is alive if the trust document allows revocation. Testamentary trusts are created by a will and can only be changed by changing the will. Once a trust becomes irrevocable - for example after the settlor"s death or under the trust"s terms - changes usually require agreement of all beneficiaries or a court order in limited circumstances.
Trusts generally must file a T3 trust income tax and information return annually with the Canada Revenue Agency. Income retained by the trust is taxed at trust tax rates, while income distributed to beneficiaries is usually reported by beneficiaries on their returns. Complex rules cover attribution, trust reporting, beneficiary allocations, and filing deadlines. Tax advice from an accountant or tax lawyer is often essential.
Assets held inside a properly drafted and funded inter vivos trust are generally not subject to probate because they are owned by the trust, not the deceased"s estate. However, assets that remain solely in the deceased"s name at death may still require probate. Careful estate planning and asset transfer into a trust are necessary to achieve probate avoidance.
If a trustee breaches fiduciary duties - for example by mismanaging funds, making self-interested decisions, or failing to account - beneficiaries can seek legal remedies. Remedies include removal of the trustee, damages to compensate for losses, tracing of misapplied assets, and court-ordered accounting. Early legal advice helps preserve evidence and protect beneficiary interests.
Costs vary based on complexity, the lawyer"s experience, and whether professional trustee services are used. A simple inter vivos trust may have modest draft and setup fees, while complex estate plans, specialized disabled-persons trusts, or trusts requiring tax planning can cost more. Ongoing costs can include trustee fees, accounting and tax preparation, investment management, and legal advice for administration.
Trusts can offer some protection, but protection is not absolute. Courts may set aside transfer of assets to a trust if transfers were made to defeat creditors or to avoid obligations during family breakdown. Timing, the settlor"s intent, and the nature of the transfer matter. Creditor protection must be balanced with legal and ethical constraints and should be planned well in advance with legal counsel.
Look for lawyers with experience in estate planning, trusts and estates, or elder law. Check credentials with the Law Society of Alberta, ask for references, and inquire about specific experience with the type of trust you need. Many lawyers offer initial consultations to discuss goals and fees. Consider consulting both a lawyer and an accountant for comprehensive trust and tax planning.
Canada Revenue Agency - for information on trust taxation, filing requirements and T3 returns.
Law Society of Alberta - to confirm a lawyer"s credentials and to find referrals for lawyers who practice trusts and estates law in your area.
Court of King"s Bench of Alberta - the court that handles significant trust disputes and applications related to trustees and estates.
Public Trustee of Alberta - can act for or manage estates and trusts when there is no private representative or when intervention is required for vulnerable persons.
Local bar associations and law firms in the Calgary and Chestermere area - many estate lawyers in the nearby city of Calgary serve Chestermere residents and can provide practical local expertise.
Professional accountants and trust companies - for tax planning, trust accounting and professional trustee services where appropriate.
1. Clarify your objectives - write down why you want a trust, who should benefit, and what assets you intend to place in the trust.
2. Gather documents - prepare a list of assets, deeds, account statements, existing wills, powers of attorney, and any prior trust documents or shareholder agreements that may interact with a trust.
3. Consult professionals - schedule an initial meeting with a trusts and estates lawyer and consider bringing an accountant if tax issues are likely. Ask about experience, typical fees, timelines, trustee options and any foreseeable risks.
4. Prepare questions - ask about the legal and tax consequences, trustee selection and safeguards, how to fund the trust, reporting obligations, and how disputes are handled.
5. Review drafts carefully - before signing any trust document, have your lawyer explain key clauses including trustee powers, distribution rules, amendment and termination provisions, successor trustees, and compensation.
6. Keep records and review periodically - once the trust is in place, retain clear records, ensure required tax filings are made, and review the arrangement after major life changes such as marriage, divorce, births, deaths, or significant changes in assets.
If you have an urgent concern - suspected mismanagement, incapacity, creditor claims, or imminent deadlines - seek legal advice promptly to protect rights and assets. A local trusts lawyer can provide tailored advice for your circumstances in Chestermere and guide you through the legal steps you need to take.
