Issue link: http://insights.grantthornton.ca/i/472360
Monitor, manage, maximize: Preserve family trust benefits with effective management You've spent years building a successful professional practice, and you've worked with your advisers to create a corporate structure that includes a family trust. You may have decided on a family trust for a number of reasons, such as business succession and estate planning, creditor proofing and/or multiplying access to the capital gains exemption. In many cases, a family trust also includes the ability to split income, potentially unlocking enormous benefits for you and your family members throughout the trust's life. Income splitting can be an excellent option, but all too frequently, people assume— incorrectly—that once a trust is set up, its benefits will be ensured simply by maintaining the status quo. Instead, you should be asking: "How can I make sure those benefits are preserved and protected over time?" It all comes down to effective management To maximize income splitting benefits, a family trust must be managed with care and diligence, especially given its associated complexities. Additionally, there are a number of scenarios that can impact the trust and its beneficiaries in ways you may not have anticipated. However, if you've been, and continue to be, attentive, you should be able to consistently maximize the income splitting benefits your trust affords. Ensure lasting value by getting income splitting right The CRA is focusing more time, attention and audit activity on family trusts, making it more important than ever to ensure your trust is managed with diligence and care. This is particularly critical when it comes to the income splitting process. First of all, remember that your trust is a separate entity that operates under a fixed sequential process. A well-managed trust flows one way. For example, your company makes the dividend payment into the trust, and the trustees allocate the dividend to the beneficiaries.