Introduction
When it comes to protecting your assets, minimizing taxes, and ensuring a smooth transfer of wealth to the next generation, a family trust can be one of the most powerful tools available. At Song Law Office, we help families and business owners structure trusts that reflect their unique goals and safeguard their hard-earned assets.
What Is a Family Trust?
A family trust is a legal arrangement where a trustee holds and manages property or investments for the benefit of designated beneficiaries — usually family members. Unlike a will, which only takes effect after death, a trust can operate during your lifetime and continue for years afterward.
Why Consider a Family Trust?
- Asset Protection
Assets held in a properly structured trust are generally shielded from creditors, lawsuits, or marital breakdown claims against individual beneficiaries. - Tax Planning Opportunities
Family trusts can allow income splitting with lower-income family members, potentially reducing the family’s overall tax burden. They can also be used for capital gains splitting, where the growth in the value of trust assets (such as shares of a private corporation) can be allocated among multiple beneficiaries, each using their own lifetime capital gains exemption, thereby significantly reducing taxes on a sale. - Succession Planning
For business owners, a trust can help with a smooth transition of ownership to children or other successors, avoiding probate and ensuring continuity. - Flexibility and Control
A trust agreement can specify exactly how and when assets are distributed, giving you greater control over the use of your wealth.
Common Uses of a Family Trust
- Holding shares of a family business
- Owning investment portfolios or real estate
- Splitting capital gains among beneficiaries when disposing of qualified small business corporation shares or certain other assets
- Providing for minors or dependents with special needs
- Ensuring privacy in asset transfers (trust agreements are private documents, unlike wills filed in probate)
Key Considerations Before Setting Up a Family Trust
While family trusts can offer significant benefits, they must be carefully planned to avoid unintended tax consequences or legal disputes. Questions to consider include:
- Who will serve as trustee(s)?
- Who will be the beneficiaries, and how will they receive benefits?
- What assets should be transferred into the trust?
- How long should the trust remain in place?
How Song Law Office Can Help
Establishing a family trust requires careful legal drafting and strategic tax planning. At Song Law Office, we:
- Advise on the right trust structure for your needs
- Draft trust agreements tailored to your family and business circumstances
- Coordinate with accountants and financial advisors to optimize tax efficiency, including structuring for capital gains splitting where appropriate
- Provide ongoing guidance to trustees on their legal duties
A well-crafted family trust can preserve your legacy, protect your assets, and give you peace of mind knowing your loved ones are provided for.
Conclusion
Whether you are a business owner planning for succession, a parent wanting to protect your children’s inheritance, or simply someone who wants to safeguard your wealth, a family trust — especially one that allows for capital gains splitting — may be the right solution. At Song Law Office, we combine legal expertise with practical insight to help you make informed decisions about your future.
Contact us today to discuss whether a family trust could be the right choice for you.