• They must be created by a living settlor who’s at least 65.
  • With an alter-ego trust, the settlor is entitled to receive all the trust income that arises before she dies.
  • With a joint-partner trust, the settlor and/or her spouse (or common-law partner) are entitled to receive all the trust income until the death of the survivor.
  • No one else can receive or use any trust income or capital until the settlor dies (for an alter-ego trust) or until both die (for a joint-partner trust).
  • The settlor can transfer assets to the trust on a tax-deferred basis while alive.
  • These trusts are taxed at the top marginal rate. Income of the trust is generally taxed at the settlor’s (or spouse’s or partner’s) graduated rates, unless the trustees decide to tax the income within the trust.
  • Assets in these trusts are deemed disposed on the death of the settlor (for an alter-ego trust) or the survivor of the partners (for a joint-partner trust) and generally every 21 years after that.

Originally published in Advisor's Edge