What Is a Trust?

A trust is one of the most flexible and powerful tools in estate planning. It allows you to transfer assets to someone else—called a trustee—to manage on behalf of a third party, the beneficiary. Trusts can be used to provide financial support, protect assets, manage taxes, and ensure your wishes are followed, often with more control than a Will can provide.

Understanding what a trust is and how it functions helps you decide whether it could be an effective part of your estate or wealth plan.

The Purpose of a Trust

A trust provides structure and control over how assets are managed and distributed, both during your lifetime and after. It can support individuals who aren’t ready or able to manage assets, such as children or dependents—and ensure your wishes are carried out over time. Trusts also help protect assets, manage complex family dynamics, and support long-term goals like education, charitable giving, or multigenerational planning.

Learn the core elements of a trust

A trust is not a single document or asset—it is a legal relationship. It involves three main parties:

Role	What They Do
Settlor	The person who creates the trust and transfers assets into it
Trustee	The individual or institution who manages the trust and follows its instructions
Beneficiary	The person or group who receives income or assets from the trust

The trust outlines how and when assets are distributed, what the trustee can and cannot do, and under what conditions the trust ends.

Tip: Trusts can be created while you are alive (inter vivos trusts) or as part of your Will (testamentary trusts), depending on your goals.

How trusts work in estate and financial planning

Trusts offer more structure than a direct gift in a Will. They can delay, condition, or customize distributions to beneficiaries. This makes them useful in many real-life scenarios.

Common uses of trusts include:

Providing for minor children or beneficiaries with disabilities
Protecting assets from creditors, divorces, or lawsuits
Managing inheritance over time, rather than in a lump sum
Coordinating charitable giving
Reducing probate exposure or managing tax obligations

Important: Not all trusts are tax shelters. Some may trigger tax filings, income attribution rules, or special reporting obligations. Professional guidance is critical.

The main types of trusts used in Canada

Different types of trusts serve different purposes. Some are used for lifetime financial planning, others for after-death asset distribution.

Family trusts: Often used to hold shares in a family business or distribute wealth to children over time
Testamentary trusts: Created through your Will, often used for children or dependants
Henson trusts: Designed to support beneficiaries with disabilities without affecting government benefits
Spousal trusts: Used to provide income or support to a surviving spouse while preserving capital for others
Charitable remainder trusts: Provide income to a beneficiary during life, with the remainder going to charity

Each trust has unique legal and tax implications, so choosing the right one is critical.

How Optimize helps you explore and use trusts effectively

At Optimize, we help you go beyond basic estate documents. We help you understand whether a trust fits your goals, and if so, how to structure it for clarity, control, and legal strength.

Our support includes:

Evaluating whether a trust is appropriate for your needs
Coordinating with legal and tax advisors for design and compliance
Aligning your trust with your Will, POAs, and investment plan
Helping you communicate the trust’s purpose with your family and executor

We make complex tools understandable and actionable.

Why trusts can offer control, protection, and long-term support

A trust is not about locking away your money—it is about opening a path to more thoughtful, structured giving. Whether you want to care for a vulnerable loved one, stagger an inheritance, or reduce risk, a trust gives you tools a Will cannot offer on its own.

Trusts are not just for the wealthy. They are for the thoughtful.

Understand what a trust can do. Ask how it might fit your goals. And add structure to your legacy that lives beyond a single moment in time.