Business Management Articles
Living Trust is a Valuable Financial Planning Tool
A living trust can play an important role in financial planning.
“Living” or “inter-vivos” trusts are legal arrangements that enable you to transfer to others the benefit of owning assets, while you retain control over those assets. Trust income may be allocated to beneficiaries and taxed in their hands, thereby reducing your taxes.
Here are some of the situations where living trusts can be particularly helpful.
- The highest income earner in the family can transfer their income-producing assets to a trust whose beneficiaries are your family members
- Transfer the future growth in the value of your business to your children by using a trust in an estate freeze, reduce capital gains taxes upon your death
- Finance a buy/sell agreement for shareholders of your business by setting up a living trust as the owner and beneficiary of a life or disability insurance policy
- Assist family members who are financially dependent or physically/mentally disabled by transferring assets to them through a trust
- Support a favourite charity by establishing a trust that will give you an immediate tax credit while allowing you to receive income from the assets during your lifetime
- Reduce probate taxes by transferring assets to a trust
These are only some of the situations where a trust can help you leverage your business or personal assets to benefit yourself and others.
Bruce Nicholson, CA, BDO Dunwoody LLP www.bdo.ca
