What Is a Spousal Trust and When Should You Use One?

Summary:

A spousal trust is an estate planning tool that allows one spouse to financially support their surviving spouse while maintaining control over how assets are ultimately distributed. Instead of leaving assets directly to a spouse, they are placed in a trust and managed for the spouse’s benefit during their lifetime. After the spouse passes away, the remaining assets go to beneficiaries chosen by the person who created the trust. Spousal trusts are often used in second marriages, blended families, and long-term estate planning in Ontario.

Many married couples assume the simplest estate plan is to leave everything directly to their spouse. While this may work in some situations, it does not always provide the level of control or long-term planning some families need.

A spousal trust allows you to financially support your spouse while still determining how your assets will eventually be distributed.

What Is a Spousal Trust?

A spousal trust is created for the benefit of a surviving spouse after one spouse passes away.

Instead of transferring assets directly to the spouse, those assets are placed into a trust and managed by a trustee.

The surviving spouse can typically:

• Receive income generated by the trust

• Access funds for financial support during their lifetime

• Benefit from the trust according to the terms of the estate plan

After the surviving spouse passes away, the remaining assets are distributed to the beneficiaries chosen by the person who created the trust, often children or other family members.

Why Do People Use Spousal Trusts?

Financial Support for a Surviving Spouse

A spousal trust can provide ongoing financial support through income or access to funds during the surviving spouse’s lifetime.

More Control Over Your Estate

Leaving assets directly to a spouse usually gives them full control over how those assets are later distributed. A spousal trust allows you to maintain control over the final distribution of your estate.

Helpful for Blended Families

Spousal trusts are commonly used in second marriages or blended families, where individuals want to support a current spouse while preserving an inheritance for children from a previous relationship.

The Role of the Trustee

A trustee manages the assets in the trust and ensures the terms of the trust are followed. This may include managing investments and distributing income to the surviving spouse.

The trustee may be a trusted family member, professional advisor, or corporate trustee.

When Might a Spousal Trust Make Sense?

You may want to consider a spousal trust if:

• You are in a second marriage or blended family

• You want to support your spouse while preserving assets for your children

• You want greater control over how your estate is distributed • You have significant assets that require structured planning

Planning Ahead Matters

Estate planning helps ensure your loved ones are protected and your wishes are respected.

If you are considering a spousal trust or reviewing your estate plan, professional guidance can help you determine the right approach.

Contact our office today to schedule a consultation and discuss how the right estate plan can protect your spouse, your assets, and your family’s future.