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Family Trusts

Recent budget eliminated some of the tax advantages a trust structure. In its simplest terms, a trust is an arrangement whereby a trustee holds property for the benefit of one or more beneficiaries. It can be set up at any time or on death by one’s will. Trusts are taxed as separated taxpayers. A trust (testamentary) created on death will be taxed at the same rates as an individual. All other trusts are taxed at a flat rate, which is the top rate of tax (about 46.4%, depending on the province).

Trusts were a useful way of directing income to children for their education to provide for financial support, or to transfer funds to other relatives. The benefit here is the receipts of trust income pay the tax at their marginal tax rate versus the tax rate of the trust. Recent budget eliminated some of the tax advantages a trust structure and due to the complexities of trust, you should review the planning opportunities with a professional advisor.

E.&O.E.