If you own a family business or other investment holdings, a Family Trust may be an effective way to help protect wealth and reduce taxes. Essentially, assets are transferred to a Trustee and held "in trust" for the benefit of other beneficiaries. Family Trusts can be used as a way to split income among family members in order to take advantage of lower tax rates and other favorable tax rules, as well as an effective retirement and estate planning tool.
Common Uses for Family Trusts
- Private businesses/professional corporations with significant equity/value
- Large investment portfolios/inheritances
- Real estate/rental properties
- Family members/special needs
One of the biggest tax advantages of Family Trusts is the ability to claim multiple capital gains exemptions among family members on the sale of a business. This can amount to substantial tax savings when selling a business that is worth several million dollars.
In addition, family trusts are often used as part of an estate plan to transfer wealth to future generations.
Is a Family Trust Right for you?
There can be significant financial and tax advantages to having a Family Trust. There can also be risks and drawbacks, depending on your financial and family situation. There are lots of legal and tax rules to consider, and the Trust needs to be set up and administered properly to be effective. Professional advice is a must.
At Belliveau Veinotte, we can review your situation and identify if a trust is right for you. We will work with you and your lawyer to ensure the trust is properly set up and reviewed on an ongoing basis to ensure it continues to meet your needs. We also look after the annual tax filing and record keeping as needed. We give you peace of mind that your hard earned assets are well protected.