Inter Vivos Trusts

Properly structured trusts are useful tools for achieving your tax and non-tax objectives.

Inter vivos or family trusts can be used in Tax Planning to maximize the amount of after-tax cash that remains in your hands and in Estate Planning for tax and non-tax purposes.  Lawyers at Granville Law Group have been creating trusts for clients for many years to achieve clients’ objectives.

Tax objectives

Inter vivos trusts are taxed at the highest tax rate applicable to individuals, but distributions made to a beneficiaries (who are presumably in a lower tax bracket) are deductible to the trust, if properly made. That attribute is very important.  For example, a family trust can be a shareholder of a corporation, which may allow a business owner to achieve tax benefits, including:

  • Income splitting, subject to TOSI (tax on split income) rules which apply after 2018 taxation year, for income to be distributed to beneficiaries in lower tax brackets, resulting in lower overall tax liability;
  • Multiplying the Lifetime Capital Gain Exemption, sheltering the gain on sale of certain private company shares, resulting in substantial tax saving;
  • Avoiding probate and probate fees, preserving confidentiality, avoiding probate expenses and delays.
Non-tax objectives
  • Flexibility for transition of the ownership of the business to the next generation, because shares may be distributed to beneficiaries in a future and in proportions that trustees will determine,
  • Asset management and protection; the trustees are given a discretion to make decisions about distribution of the assets of the trust over time once the circumstances evolve and change, rather than immediately at the date of death. It is also often difficult for the creditor to attack the beneficiary-debtor’s interest in a discretionary trust because the value of that interest is not set and depends upon decisions of the trustees,
  • Avoiding wills variation claims restoring the testamentary freedom, and
  • Providing for disabled beneficiaries: trusts can be structured so that not to disentitle the disabled person from receiving provincial disability benefits, including non-monetary benefits.

 You can find additional information on our blog.

We will analyze your circumstances and identify the best ways to protect your interests. Call us at 604-669-6580 or arrange a free, 30-minute consultation using our contact form