October 24, 2017
Learning Glossary

Accounts / Passing of Accounts

One of the official duties of any Trustee, Estate Trustee, Power of Attorney or Guardian is to keep thorough records of how he or she managed assets. The passing of accounts is the filing of this record with a court in a highly-specific style and is required for Estates, Trusts, Powers of Attorney and Guardianships.

Agent

Someone who is authorized to act for or in place of another; a representative. An Agent acts with varying levels of consent given to him or her by the other person. Legacy Private Trust is happy to act as Agent for anyone appointed Trustee, Estate Trustee, Guardian, Custodian or for a Foundation. The provision of agency services to an Estate Trustee is often referred to as executor services.

Alternate Trustee / Alternate Estate Trustee

An alternate Trustee or alternate Estate Trustee can be appointed in a Trust Deed, Will or Codicil and used as a back-up in case a Trustee or Estate Trustee becomes unable or unwilling to act. Appointing Legacy Private Trust as alternate Trustee or alternate Estate Trustee means that we can assist quickly if something comes up rather than having to wait to be appointed once a problem has already arisen.

Beneficiary

A beneficiary (sometimes referred as an heir) receives assets from a person’s estate or from a trust (this includes Guardianships, Foundations and Custodian arrangements). These assets are distributed in accordance with a Will, Codicil, Trust Deed, court order, management plan or other agreement. Beneficiaries may receive an income stream or a capital sum and have the absolute right to receive the assets. These could be spouses, children, grandchildren, other family, friends or even long-time employees, business owners, companions or charities.

Capital Beneficiaries

These types of beneficiaries are entitled to only the capital in the trust. This may become available to them at a determined time, sometimes after all the income beneficiaries have passed away or may be set aside for specific uses, such as education or the purchase of a first home. It is possible to be both an income beneficiary and a capital beneficiary.

Codicil

A codicil is a document that amends, modifies or clarifies a Will in some way. This is a way to make slight adjustments to your Will without having to re-draft it in its entirety. Codicils are often used to change Estate Trustees, Trustees and beneficiaries.

Corporate Agent

A Corporate Agent is an Agent who is authorized to act on behalf of a corporation. This can be useful in a variety of ways and is most popular with domestic and offshore holding companies, but can be used in many other creative ways.

Custodian

A Custodian is a form of an agency appointment where a person or institution such as Legacy Private Trust cares for or controls the assets on behalf of another. A Custodian appointment is often used for foundations.

Discretionary Trust / Non-Discretionary Trust 

A Discretionary Trust is a type of Trust where the Trustee excercises discretion with regards to decisions within the Trust. In this context, the Trustee has the duty to make responsible decisions using good judgement with regards to occurances such as a distributions to a beneficiary. In a Non-Discretionary Trust, the Trust Deed specifically outlines the nature of the Trust. In this context, the Trustee must follow the deed to the letter.

Escrow Agent

An Escrow Agent is used as a third party Custodian when assets are being transferred from one party to another. There are always conditions which must be met by one or more of the parties involved before the assets can be released. Escrow Agents can be used in many ways, but they are often used to distribute the proceeds of settlements or the sale of a business. At Legacy Private Trust we can take on the administrative responsibility of managing and distributing the assets as a Escrow Agent.

Estate Freeze

An estate freeze is an estate planning tool that is used to defer income taxes to a later date by limiting capital gains that are realized just before death. By using a trust, you can retain control of your capital property during your life and provide for future growth in the property to be transferred to someone on your death.

Estate Trustee / co-Estate Trustee / Alternate Estate Trustee

An Estate Trustee (traditionally known as an executor) is someone who carries out or executes the provisions of someone else’s Will or Codicil. This can involve over seventy separate tasks and can take a minimum of 1 year to sometimes several years before an estate is distributed fully, depending on the complexity. If your estate ends up in litigation, it may take even longer to administer it. Acting as an Estate Trustee requires a high level of legal, tax and accounting expertise. A co-Estate Trustee is someone who acts as Estate Trustee along with another person or trust company. An alternate Estate Trustee steps into the job in the event that the acting Estate Trustee becomes unable or unwilling to act.

Fiduciary

A fiduciary is a person that is entrusted with managing another’s money or property. A fiduciary must exercise a high standard of care and act in good faith and only for the benefit of beneficiaries. Legacy Private Trust takes on a fiduciary role by acting as Trustee, Estate Trustee, Agent, Guardian or Custodian.

Foundation

Private foundations are set up by an individual, a family or a group of individuals for charitable giving and can be administered by Legacy Private Trust by appointing us as Agent. The Legacy Private Trust Foundation is a great option for those who do not wish to establish their own foundation, for those who need time to establish their own foundation but want to receive tax benefits immediately, for those who would like to remain fully anonymous in their giving and/or for those who wish to make a direct contribution (with tax receipt) which will be directed by the Foundation’s Board of Directors.

Guardian for Personal Care & Health

In conjunction with a Guardian for Property, a Guardian for Personal Care & Health looks after the non-property related decisions for someone deemed unable to do so. These decisions can range from responsibility for parenting children to helping adults make day-to-day decisions. Legacy Private Trust does not accept appointments as Guardian for Personal Care & Health.

Guardian for Property

A Guardian for Property is a person who has the legal authority and the corresponding duty to care for the property interests of another person. Usually a person requires a Guardian because he or she is incapable of caring for his or her own property interests due to infancy or incapacity.

Income Beneficiaries

These types of beneficiaries are entitled to receive only the income earned on the capital in the trust. A trust deed may provide for them to receive capital in certain situations.

Income Splitting

Income splitting with a spouse, often done through a trust, can reduce the amount of total tax paid by a couple by pooling their income and putting both of them in the same, lower tax bracket. This can lead to a lower combined tax bill and can reduce or eliminate Old Age Security claw backs.

Power of Attorney

A Power of Attorney is a legal document that gives someone else the right to act on your behalf. This type of fiduciary appointment involves naming a person to make decisions for you when you are no longer able to do so for yourself. An appointment of an Attorney under a Power of Attorney is used in anticipation of sudden changes in circumstances and is used in combination with a Will and trusts to create an overall estate plan.

We can be appointed as your Power of Attorney for Property in several ways:

  • Continuing Power of Attorney for Property – We can manage and administer your financial affairs now and later on if you become incapable of doing so yourself
  • Limited Power of Attorney for Property – This can be established for a short period, such as managing property while on an extended vacation

There is another type of Power of Attorney: a Power of Attorney for Personal Care & Health. However, since this is more appropriate for family members and friends, we do not accept these types of appointments at Legacy Private Trust. Appointing an Attorney for Property is a type of Agency appointment.

Probate / Probate Taxes

Probate is the process of getting the court to rule that a Will is legally valid. In order to move forward with most estate administration, an application for probate must be filed with the court and what may be significant probate taxes must be paid. These probate taxes can be quite high, but they can be minimized significantly by developing a comprehensive estate and trust plan with your lawyer and an experienced Trustee or Estate Trustee like Legacy Private Trust. Probate taxes are now commonly known as Estate Administration Taxes.

Settlor

A settlor is the person who creates a trust. The settlor contributes the assets which become the property of the trust. A settlor must be an adult in his or her jurisdiction, must not be legally restricted and must be mentally competent. A Settlor can also be a beneficiary in many circumstances.

Trust

A trust is a relationship that exists whenever a person called a Trustee holds property for the benefit of another known as a beneficiary. The specifics on the administration of a trust are outlined in your province’s legislation. The person who creates or settles a trust is referred to as the settlor in the trust relationship.

Trusts are used to determine how assets are distributed during one’s lifetime or after passing away. They are a tool used to transfer wealth between generations and to make provisions for a spouse, minor or adult children and non-family members such as long-time employees, companions, friends or charities. Other benefits of a trust are a reduction in probate taxes, confidentiality of assets and beneficiaries and protection of your estate from creditors.

Trustee / co-Trustee / Alternate Trustee

A Trustee is the individual or trust company who holds the assets and administers them for the benefit of another in accordance with the wishes of the settlor. A co-Trustee is someone who acts together as Trustee with another individual or trust company. An alternate Trustee appointment avoids you having to deal with a Trust having no Trustee in the event that a Trustee becomes unable or unwilling to act.

Trust Deed

A Trust Deed is also known as a Trust Agreement or Trust Indenture and is a document that outlines the terms of a fiduciary relationship between the settlor, Trustees and the beneficiaries. The deed outlines the manner in which assets are to be distributed to beneficiaries

Will

A Will is a document that indicates one’s wishes on passing away, including how one’s assets are to be distributed. It can include appointment of Guardians and the establishment of any trusts or foundations. Specific Estate Trustees are named in a Will and their responsibility is to carry out the deceased’s wishes set out in the Will.