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ARTICLE · 22 MAY 2024

Litigation Aspects To An Alter-Ego Trust

Lindsay Kenney LLP
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The Court has stated numerous times that the use of an alter-ego trust is a valid planning tool, but that does not mean it cannot be challenged in certain circumstances.

CanadaFamily and Matrimonial
Scott Somers
Scott Somers

The Court has stated numerous times that the use of an alter-ego trust is a valid planning tool, but that does not mean it cannot be challenged in certain circumstances. The most common among these challenges include (1) failure to comply with the basic requirements, (2) the inclusion of a pour-over clause, and (3) if it is considered a fraudulent conveyance.

  1. Failure to Comply with Basic Requirements

As noted in the drafting section, there are certain requirements for an alter-ego trust to be valid. Should the settler not be older than age 65 nor is not a resident of Canada, then the alter-ego trust will fail to be established. Likewise, the settlor MUST be entitled to all the income from the trust, and no one else but the settlor is allowed to receive or use any of the income from the trust.

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About Mackrell International – Canada - Lindsay Kenney LLP is a full service business law firm with offices in Vancouver and Langley, BC and a member of Mackrell International. Mackrell International – Canada is comprised of four independent law firms in Alberta, British Columbia, Ontario and Quebec. Each firm is regionally based and well-connected in our communities, an advantage shared with our clients. With close relations amongst our Canadian member firms, we are committed to working with clients who have legal needs in multiple jurisdictions within Canada.

This article is intended to be an overview and is for informational purposes only.

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