Today, I want to tackle a question that I often hear when introducing the concept of a family trust to my clients: “How do I divide assets with a family trust in Canada?” Picture this: Mom and Dad, with their eyes set on their estate and succession planning, pondering over the best way to distribute their assets. It’s a common dilemma, especially when there are offspring involved. Do they split everything evenly down the middle? Well, not necessarily. Enter the trust, the unsung hero of estate planning. It offers us the power to defer decisions about who gets what until a later date. Fairness might not always mean a neat 50/50 split, especially if one child is heavily invested in the family business while another pursues different paths. Watch this quick overview to learn more or read the transcript below.
Video Transcript: How do you divide assets with a family trust in Canada?
How do you divide assets with a family trust in Canada?
I’m George Dube. Saving the world from tax one bow tie at a time™.
Flexibility to divide assets with a family trust
Where mom and dad are looking at more of the estate, succession planning arrangements, they may be trying to figure out how they’re going to divide their estate.
And so for example, if there are two children, are things gonna be divided 50/50? Maybe, maybe not. The trust allows us to decide later on who should get what and fair may not be a 50/50 split, particularly where there may be one of the children are working heavily in the business and another child is not.
Would 50/50 be the desire of mom and dad?
Where again, as a further example, one of the two children has two children of their own and the other has seven or eight children.
What happens if one of those grandchildren has some form of mental, physical impairment that some additional funds would really help out with and get them further along?
Again, those types of decisions may be something mom and dad do not have the capability of making today, and in most cases we don’t. I mean, clearly we’re gonna know more in the future in terms of what we should or shouldn’t do.
Navigating uncertainty using a family trust
The family trust allows us to hold things into place and gives us that flexibility.
We also have the flexibility in deciding who gets what income, where we can change things as time progresses based on income levels, participation. Other factors going on.
Locking in tax benefits today
We can do a variety of the estate and succession planning where we’re saying, let’s wait till we have more information, but we want to lock in the tax benefits today.
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Resources
For additional resources related to how you can divide assets with a family trust in Canada:
- Family trusts: Ultimate FAQ for real estate investors
- Paying kids to save taxes: Here’s how in Canada
More questions?
Still have questions? I want to help you Do Wonderful Things™, so please contact me today.
Remember – circumstances are unique! This information is summary in nature. Seek out advice from your tax advisor about your specific situation.
