What if your ghost was rich?

If you had received $ 1 million (M $) when you were 18, would you be better off or worse off today?

Fortunately, you will not let him think about it without telling him about a few tools at his disposal.

I would like to elaborate on a tool that you will not be able to fail to present to your client: the trust of the young adult.


A bit like Patrick Swayze did in my love ghost (Ghost), your client will be able to afford the luxury of accompanying his children a bit in the horrible scenario that you have exposed to him. Of course, he could pay for pottery lessons for them, but above all, he could support them financially. Its medium: the testamentary trust.

The trust allows you to continue to manage your assets in limbo, according to your values, your criteria and the reality of your beneficiaries. I always tell my clients that it is their ghost that continues to manage their property this way.

Specifically, it is sufficient to create this confidence in their will. And don’t worry, nothing, absolutely nothing, happens before their death.

Example: I build trust in my willingness to support my child in wealth management until he turns 30and anniversary. If I die when he’s 30, there’s no confidence. There is no trust tax report to make, no administrator responsibility, no accounts, nothing. The only cost associated with this is the cost of writing the will, which, however, is more expensive than a will that does not include a trust.


The trust can therefore provide the cases where the beneficiary (your client’s child, here) must be helped from the trust’s income and / or capital. Education, housing, general expenses, travel, vacations, entertainment, business investments, property purchases, family life (if he wants to see his children grow up close), volunteer work, the limit is your client’s imagination.

Actually no, the limit is also morality … We can not create immoral or impossible conditions. To receive money, you must obtain a doctorate (not possible for everyone), or you get nothing if you marry someone of the same sex are therefore conditions which cannot be imposed on the beneficiary. The playground is still large.


For tax purposes, it may be cheaper to use the entire trust income for the benefit of your beneficiary. In fact, the trust is taxed at the marginal rate of the first dollar (alas!) If its income is not transferred (paid or paid) to the recipient. If she allocates him his income, he will impose on himself, which is potentially cheaper from a tax point of view.

Warning: we are planning too much with an Excel file, and make sure to use everything. Put the man in this gear! When approximating the possible income, ask your client if he prefers to pay less tax, even if it removes the confidence from its purpose.

Example: I risk leaving $ 5 million for my only son. We can assume that my ghost will have an income of $ 250,000 a year to manage. How have I taken my son away from idleness? Will he be tempted by such means to continue his efforts (studies, start-up, etc.)?


Customers often want to predict the end of this story. They will therefore decide that the capital of the trust ends up in the hands of the recipient at a certain age. 21 years old ? 30 years?

It is also frequently chosen to spread the capital transfers. A third at 20 years, another at 25 years and the rest at 30 years, for example. I also often saw a tenth a year for 10 years.

My customers inspire me. The provisions that plan, as well as the beneficiaries who lived, after death, these rebates. So I learned to offer an uneven spread of capital transfers.

If your goal is to give your young people the opportunity to learn how to manage capital, and therefore have the luxury of making their mistakes, you may want to give them an amount that they can use up. Before next discount. Thus, if he “crashes”, he will experience a period of scarcity in which he will no longer have any capital. The manager, who is legally obliged to be a good leader, will have been able to retain his share of the capital. We thus see customers who choose scenarios such as 10% at 20 years, 40% at 25 years and the rest at 30 years, and thus are part of a gradual learning process.

With $ 5 million in capital, it does not allow you to experience this learning to leave a tenth of the capital a year. It all depends on the goals and the amounts at stake. Everything is human.

Some customers also want the trust to never deplete its capital during the life of the recipient … This makes it possible to support more than one generation.


Your client can therefore make a list of the human values ​​that he wants to convey through his trust. What does he let go of? What does he insist on? His counselor will be able to guide him within the legally possible limits.

The trust is made of 100% Lycra, it is hyper flexible. You need to know how to leverage this aspect to the benefit of your client.

I would like to warn anyone who wants to make a stiff trust. This is not the nature of this vehicle. Its flexibility is its strength. For example, it is good to appeal to the shop steward’s discretion by using the term “reasonable”, where it is unclear how to mark. Remember that your client is drawing his own ghost. He wants to know how he adapts.

Creating a list of scenarios that you want to encourage or highlight will allow the notary to translate everything into a human trust.


All of this, of course, prevents your client from dying while his children are still too young for him to be at peace with their leadership abilities. This scenario remains unlikely, customers have a good chance of living much longer than this. We therefore have the right to downplay the discussion and remind that we are preventing a potentially serious situation, but only potentially.

Ioav Bronchti, notary, is a senior adviser on property planning at National Bank Financial.

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