Trusts are a flexible tool used in all aspects of our economy, originally developed as a means of protecting and perpetuating the wealth of high-income families. It is perhaps not surprising that trusts regularly make an appearance in family law cases. How trusts fit into family property and support law in Ontario and similar jurisdictions is not particularly well-developed. Basic concepts like whether trust interest is property, how trusts should be valued, and when to impute trust benefits as income for support are still subject to uncertainty. As a result, it is important to retain a lawyer with an in-depth understanding of family trusts and the interplay between trusts and core family law concepts.
At Boulby Weinberg LLP in Toronto, our family lawyers have vast experience representing high-income spouses in family disputes, as well as advising parties on family trusts in the early stages of a relationship. We understand the value trusts can have in the protection of wealth and also where they may be vulnerable from a legal perspective.
A family trust may be created to protect a family’s assets, plan for wealth distribution and for tax planning purposes. A trust creates a legal relationship between trustee and beneficiary, whereby the trustee must act in the beneficiary’s best interests with respect to the assets held under the trust. This means they must protect the value of the assets, distribute them in accordance with the terms of the trust agreement and otherwise ensure the beneficiary sees the maximum benefit possible under the terms of the trust.
If a family home is owned by a trust to which one of the spouses is a beneficiary, the home does not fall within the definition of a matrimonial home under the Family Law Act. There is no loss of deduction for the value of the home at the date of marriage, even assuming that the beneficial interest is property under the Family Law Act. There is no restriction on disposition and there are no rights of possession. This so even if the spouse is both beneficiary and trustee.
Trusts present particular challenges when it comes to property valuation for the purposes of the equalization of family property. For example, there may be issues related to the trust’s liquidity or contingencies for the beneficiary to receive the benefit of the trust. To understand exactly how a trust may impact issues such as support or the division of property, the specifics of the trust will require careful review. At Boulby Weinberg LLP, our experienced family lawyers have worked with many high-asset families with complex financial arrangements. We are exceedingly familiar with family trusts and how they affect family asset distribution. Whether you are the beneficiary of a trust or your former spouse is, we will work to ensure your interests are carefully protected throughout the equalization process.
Trust income is also relevant for child and spousal support determinations, which are tied to a person’s income. A court may impute income to a spouse who receives income distributions or other benefits from a trust. If a person is paid a one-time disbursement from a trust as opposed to regular trust income, this may not be imputed to that spouse as income. Each case is unique depending on the circumstances. No matter the circumstances of your particular situation, we have the background in complex financial arrangements needed to maximize your support eligibility or minimize your obligation, as necessary.
Trusts can be extremely complex instruments, with a variety of contingencies and other complications affecting the payment of income and the ownership of various assets. If you or your spouse is the beneficiary of a family trust, we will provide a comprehensive overview of the implications for the division of your family property and the payment of support. The family law lawyers at Boulby Weinberg LLP in Toronto, advising on property and support claims related to family trusts.
To arrange a consultation with a reputable and knowledgeable family law lawyer at Boulby Weinberg LLP, please complete our confidential online questionnaire, which will provide you with valuable preliminary information tailored to your situation. A representative from our firm will contact you within one business day to discuss your matter further and arrange an initial meeting. To contact our firm without completing the questionnaire, please reach out to us online, or call us at 647-494-0113 ext. 102.