Setting up a standard family trust (inter vivos trust) in New Brunswick typically costs between $3,000 and $7,000 CAD in initial legal and accounting fees. While the upfront cost is significant, trusts are highly effective for avoiding probate fees and protecting generational wealth from creditors.
For families and business owners looking to protect their wealth, a standard Will is sometimes not enough. 🔒 A family trust is a powerful legal structure that allows you to transfer ownership of your assets into a secure vehicle, managed by people you trust, for the benefit of your loved ones. In New Brunswick, trusts are increasingly popular for minimizing tax burdens, bypassing the public probate court system, and shielding assets from potential future creditors or marital breakdowns.
Whether you are a farming family in Woodstock looking to pass down land, or a successful business owner in Dieppe wanting to implement an estate freeze, understanding the costs and the setup process is crucial. 📍 This guide explains how family trusts operate under Canadian law and what you can expect to pay your advisory team.
Step-by-Step Process to Create a Family Trust in New Brunswick
Creating a trust is a collaborative effort. It usually requires the combined expertise of an estate planning lawyer to draft the legal framework, and a chartered professional accountant (CPA) to ensure the structure meets the strict rules of the Canada Revenue Agency (CRA).
Step 1: Define Your Goals and Appoint the Parties
Before any paperwork is drafted, you must decide exactly what the trust is meant to achieve. 🕵 You will need to identify three key parties: the Settlor (the person creating and funding the trust), the Trustees (the people who will legally manage the trust assets), and the Beneficiaries (the family members who will ultimately receive the income or assets).
Step 2: Drafting the Trust Deed
Your lawyer will draft the Trust Deed, which is essentially the rulebook for your trust. 📝 This complex legal document outlines exactly how the Trustees are allowed to manage the money, when they can distribute funds to the Beneficiaries, and how long the trust will last. A well-drafted deed provides maximum flexibility while strictly adhering to provincial laws.
Step 3: Settling the Trust
A trust does not legally exist until it holds property. 💵 To formally bring the trust to life, the Settlor must “settle” it. Traditionally, this is done by gifting a physical silver coin or a $10 bill to the Trustees, which is taped directly to the signed Trust Deed. This act legally creates the trust relationship.
Step 4: Funding and Registration
Once created, the Trustees will take the Trust Deed to a bank to open a dedicated trust bank account. 🏨 You can then transfer your larger assets, such as corporate shares or real estate, into the trust. Finally, your accountant must register the trust with the CRA to obtain a unique Trust Account Number so that it can file annual T3 tax returns.
How Much Does it Cost in New Brunswick?
Establishing a trust is a premium legal service that involves complex tax planning. 💵 Here is a breakdown of the typical costs associated with setting up and maintaining a family trust:
| Service / Requirement | Estimated Cost (CAD) |
|---|---|
| Legal Fees (Drafting the Trust Deed) | $2,500 – $5,000+ |
| Accounting Fees (Initial Tax Strategy) | $1,000 – $3,000 |
| Annual CRA T3 Tax Return Filing | $750 – $2,000 per year |
| Property Transfer Taxes (If applicable) | Varies based on asset value |
How Long Does the Process Take?
Due to the complex legal and tax implications, setting up a family trust takes longer than drafting a simple Will. 🕑 From the initial strategy meetings with your lawyer and accountant to the final signing of the Trust Deed, the process generally takes 4 to 8 weeks. Transferring complex corporate shares into the trust (like an estate freeze) may add several more weeks to the timeline.
Frequently Asked Questions (FAQ)
Do trusts avoid probate fees in New Brunswick?
Yes. Assets held within a family trust do not belong to you personally; they belong to the trust. Therefore, when you pass away, those assets do not form part of your estate and bypass the New Brunswick Probate Court entirely, saving your family significant probate taxes and lengthy court delays.
What is the 21-year rule for trusts?
Under Canadian tax law, most family trusts are “deemed to dispose” of their assets every 21 years. This means the CRA treats the trust as if it sold everything it owns, triggering massive capital gains taxes. Your advisory team must actively plan to distribute assets before this 21-year anniversary hits.
Can I be the Trustee of my own family trust?
Yes, you can be a Trustee, but for tax and legal protection reasons, you generally should not be the sole Trustee if you are also the Settlor or a Beneficiary. Having at least one independent Trustee (like a trusted friend or professional advisor) is strongly recommended.
Do I still need a Will if I have a trust?
Absolutely. A family trust only controls the specific assets you transfer into it. You will still own personal property, everyday bank accounts, and vehicles outside the trust. A “Pour-Over Will” is often used to catch these remaining assets and direct them appropriately upon your death.
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