Just a Minute - Podcast Episode 26: Alter Ego Trusts, an Estate Planning Strategy for Seniors Part 1

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[00:10] Welcome to a new episode of "Just a Minute" by Landmark Law.

[00:13] Today's episode is presented to you by Vicki on May 5th, 2023, to help educate our listeners on various legal scenarios.

[00:24] Today's episode will be Part 1 on Alter Ego Trusts, an Estate Planning Strategy for Seniors. The Alter Ego Trust was introduced in the Income Tax Act in 2000.

[00:33] It is the equivalent of the Joint Spousal and Common-law Partner Trust, but for single adults. The strategy behind this new type of trust is to enhance estate planning opportunities for seniors. Some advantages of the Alter Ego Trust include:

[00:46] avoidance of estate administration tax on assets held in the trust by the settler; privacy and non-public disclosure of settlor's assets; trustees to manage the assets should the settlor become mentally incapable without the need of a separate power of attorney;

[01:04] creditor protection since ownership of the asset is transferred to the trustee;

[01:09] lower litigation risks compared to will since intervivos trusts are less easy to challenge;

[01:16] and unlike other trusts, the alter ego trust is not subject to the 21-year deemed disposition rule and is instead deemed to be disposed on the death of the settlor, and

[01:27] there is a tax deferred rollover of assets from the settlor taxpayer to the trust and the resulting capital gain or loss is taxed in the trust upon the death of the settlor.