Trusts in Estate Planning: How They Work and When to Consider One

When most people in the North Okanagan think about estate planning, they think of a will. A will is essential, but it is not the only tool available. For many families in Vernon, Armstrong, and Lake Country, a trust can add flexibility, protection, and peace of mind that a will alone cannot provide, whether the goal is caring for a child, supporting a family member with a disability, or managing how and when an inheritance is received.

The word "trust" can sound like something reserved for the very wealthy, but that is a misconception. Trusts are practical tools used by everyday families across British Columbia. This article explains what a trust is, how trusts work in estate planning, and the situations where one may be worth considering.

What Is a Trust, in Plain Language?

A trust is a legal relationship in which one person or institution, called the trustee, holds and manages property for the benefit of someone else, called the beneficiary. The person who creates the trust and contributes the property is often called the settlor.

Think of it as separating two things we usually assume go together: legal control of an asset and the benefit of that asset. The trustee controls and manages the property, but must do so entirely for the beneficiaries, following the instructions written into the trust document.

Three roles to remember:

• Settlor: the person who creates the trust and sets its terms
• Trustee: the person or institution responsible for managing the trust property
• Beneficiary: the person or people the trust exists to benefit

Trusts Created in Your Will vs. Trusts Created During Your Lifetime

Trusts used in estate planning generally fall into two broad categories:

• Testamentary trusts are created by your will and only come into effect after your death. For example, your will might state that a child's inheritance is to be held in trust until they reach a certain age, with the trustee able to pay for their education and living costs in the meantime.
• Living trusts (also called inter vivos trusts) are created while you are alive. Property is transferred into the trust during your lifetime and managed according to the trust's terms, which can continue after your death.

Each type has different implications for control, administration, and taxation, and the right choice depends entirely on your circumstances and goals. This is an area where tailored advice matters, because a structure that suits one family may be entirely wrong for another.

Common Situations Where a Trust May Help

Families in the North Okanagan consider trusts for many practical reasons:

• Young children. A trust can hold a child's inheritance until they are mature enough to manage it, releasing funds in stages rather than all at once at a young age.
• A family member with a disability. A carefully structured trust can provide long-term financial support for a loved one while taking their broader circumstances, including any benefits they receive, into account.
• Blended families. A trust can balance the needs of a current spouse with a desire to ultimately pass assets to children from a previous relationship.
• Beneficiaries who need protection. If a beneficiary struggles with money management or is in a vulnerable situation, a trustee can manage funds prudently on their behalf.
• Privacy and administration. Some people use trusts as part of a broader plan to simplify the administration of their estate.
• Business owners and property owners. Trusts sometimes play a role in plans involving family businesses or real estate, coordinated with corporate and tax advice.

What Does a Trustee Actually Do?

Being a trustee is a serious responsibility. A trustee must:

• Follow the trust document. The terms of the trust are the trustee's instructions, and they must be honoured.
• Act in the beneficiaries' best interests. Trustees owe a high duty of loyalty and cannot put their own interests first.
• Manage property prudently. That includes investing responsibly, keeping trust property separate from their own, and maintaining careful records.
• Account to beneficiaries. Trustees must be able to show how trust property has been managed.

Choosing the right trustee is just as important as deciding to create a trust. Many people choose a trusted family member, while others prefer a professional or corporate trustee, particularly for long-running trusts.

Trusts and the Rest of Your Estate Plan

A trust is not a replacement for a will; the two work together. A complete estate plan in BC often includes:

• A will that distributes your estate and may create testamentary trusts
• An enduring power of attorney appointing someone to manage your finances if you cannot
• A representation agreement, the BC document that appoints someone to make health and personal care decisions on your behalf
• Any trusts that suit your family's needs, created during your lifetime or through your will

When these documents are prepared together, they tell one consistent story about how you want your affairs handled, both during your lifetime and after.

Frequently Asked Questions

Clarity for Your Family's Future

At Abbey Law Corporation, we have guided North Okanagan families through estate planning for more than a decade, from straightforward wills to plans involving trusts, powers of attorney, and representation agreements. We take the time to understand your family, explain your options in plain language, and build a plan you actually understand, because an estate plan only brings peace of mind when you know how it works.

If you are wondering whether a trust belongs in your estate plan, we would be pleased to talk it through with you.

© 2026 Abbey Law Corporation. This article provides general information and does not constitute legal advice.