The benefits of setting up a trust

The option is often worth exploring

Written by Nitin Manohar
September 14, 2017

Trusts are not a new concept by any means – they actually date back for centuries, with landowners using them to protect their property during times of war. For the modern business owner, trusts often serve as a means to minimize taxes, both during their working years and as part of their estate planning process. They can be a useful tool in transferring wealth to the next generation, keeping a cottage in the family or caring for a dependent.

At Saikali Portfolio Management, along with our team of specialists at Scotia Trust, we work closely with business owners, medical professionals and other high achieving individuals to preserve and grow their wealth, ensuring the best possible future for their family. A trust is not right for everyone, but the option is often worth exploring. Here are some of the benefits of setting up a trust in Canada.

Business succession planning

If you own a private company and intend for a family member to take over the business in future, a trust allows you to lock in the value of shares for family members with preferred shares. Ask us how this works and if it’s right for your situation.

Tax minimization

Trusts are often used to avoid probate taxes here in Ontario. An inheritance is taxed when received by the beneficiary, and then taxed again when the survivor passes away and leaves their estate to the next heir. Placing assets in an estate can prevent this dual taxation. Essentially, if assets are owned jointly in trust at the time of one’s death, they are not a part of the estate and therefore handled separately. This can include investments, property, art and jewelry, bank accounts and vehicles.

Prevent additional taxation from the U.S.

You may benefit from placing U.S. assets, such as properties or shares in American companies, into a Canadian trust in order to avoid U.S. taxation after the death of a beneficiary. Our team of specialists can review your finances and determine if this strategy is appropriate for you.

Caring for Dependents

Sometimes, a trust is used to reserve and protect funds intended for the care of a dependent, such as a relative with physical or cognitive disabilities. For example, you may place funds in trust to ensure that a dependent sibling will be cared for in the event of your death.

Setting up a trust is often a great benefit to business owners, though the specific details and recommendations will reflect each client’s needs, goals and circumstance. If you have questions about trusts or other elements of your wealth management plan, please contact us – we’d be pleased to conduct a confidential, no-charge review of your goals and financial plan.