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For Halloween this year, we have a "postmortem" theme decorating our house. My contribution was to put a Frankenstein figure in a rocking chair on the porch. I also slipped a last will and testament into his hands. What are you doing with your will this Halloween? Maybe some changes are in order.

Last week, I introduced changes to the tax rules dealing with testamentary trusts, and talked about three types of trusts: Graduated Rate Estates (GREs), Qualified Disability Trusts (QDTs) and other testamentary trusts (OTTs). Last week, I dealt with GREs. Today, I want to talk about the other two.

The trusts

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Both QDTs and OTTs are created upon your death by specific provisions in your will, unlike a GRE, which is simply your estate and is automatically created as a consequence of your death.

A QDT is a testamentary trust that has one or more beneficiaries that are eligible for the disability tax credit. A QDT is eligible for the same graduated rates of tax as GREs. Even better, QDTs are able to take advantage of these graduated rates indefinitely – there is no 36-month maximum lifespan as with GREs. So, it's possible for the disabled beneficiary of a QDT to split income with the trust indefinitely, which can create continuing tax savings as high as about $23,000 annually, depending on the province of residence and income levels of the trust and beneficiary.

Finally, there are OTTs. These include any testamentary trusts created by your will that are not QDTs or GREs. Starting Jan. 1, 2016, OTTs are subject to the highest federal tax rate going. Other key changes include elimination of the exemption from tax instalments for OTTs, and the requirement of a calendar tax year. Does this mean that OTTs should be avoided? No. There are still many benefits to setting up testamentary trusts in your will:

1. Sprinkle income to low-income beneficiaries: If you leave all or some of your assets to a testamentary trust in your will, you can empower the trustee to allocate income each year to beneficiaries in a manner that minimizes tax. The trustee could, for example, allocate income to beneficiaries with little or no other income, including grandchildren, or could allocate income to provide a "top-up" to utilize tax credits or graduated tax brackets.

2. Protect the assets: The assets you leave to your heirs by a testamentary trust can be protected from creditors or marriage breakdown.

3. Ensure professional management: What if your beneficiaries aren't capable of managing their own affairs? A testamentary trust empowers the trustee to manage the assets for their benefit. Think about young adults who may not be mature enough to manage the assets, disabled individuals who lack the ability to do so or who receive provincial social benefits that you want to protect, heirs suffering from addictions, spendthrift heirs, elderly folks who may be vulnerable to financial abuse, and minors.

4. Avoid probate fees a second time: Your assets may be subject to probate fees at the time of your death. If your beneficiaries receive your assets directly and then pass away, probate fees could be payable again. If the assets are held in a trust, the probate process and fees are avoided.

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5. Solve second-marriage concerns: Suppose you're in a second marriage but want your assets to eventually go to your kids from your first marriage. Consider leaving certain assets to a spousal trust for your second spouse to live off the income. Upon his or her death, the capital can go to your kids from your first marriage.

6. Avoid U.S. estate taxes: If you have heirs who are U.S. citizens or domiciled south of the border, leaving assets to them in a trust can help them to avoid U.S. estate tax when they pass away.

7. Receive life insurance proceeds: Life insurance proceeds on your death can be paid into a testamentary trust and thereby avoid probate fees while providing the other benefits mentioned here.

Now is the time to revisit your will. If you've set up a testamentary trust in your will you should talk to your lawyer or other adviser about whether your objectives are still being met, and if you haven't, maybe there are good reasons to consider it. Talk over the specifics of the tax changes to testamentary trusts because I've just scratched the surface. And don't forget about the tax savings from a GRE for up to three years after your death (see last week).

Tim Cestnick is managing director of Advanced Wealth Planning, Scotiabank Global Wealth Management, and founder of WaterStreet Family Offices.

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