Leveraging Family Trusts for Estate Planning and Tax Efficiency

Givens LLP | MAR 14 2024

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Estate planning? Sounds fancy, right? But it doesn't have to be! It's all about making sure your hard-earned money goes where you want it to when you want it to. You’ve built a thriving business, and now it’s time to think about the future. You need a way to preserve your legacy for years to come. That’s where estate planning comes in. Let's face it, though: estate planning isn't exactly a walk in the park. It can feel like navigating a legal jungle, filled with unfamiliar terms and complex strategies.

It doesn’t have to be that way, though – not with a Family Trust. Now, I know what you’re thinking: “Trusts? Aren’t those for old-money aristocrats who sip tea with their pinkies up?” That’s just one of the many misconceptions that we’re here to debunk.

Think of a family trust as a safety deposit box where you can store your hard-earned wealth for the benefit of your loved ones. But unlike a dusty old box in the back of a bank vault somewhere (where did you put that key?), a family trust offers some serious benefits that go beyond storage. Let’s explore some of those benefits together.

Tax Efficiency

Let's be honest, no one enjoys paying taxes. Establishing a living trust now and transferring your assets into it before you pass can help you reduce taxes in a few ways. As this article can’t be exhaustive, let us consider two of the most common benefits:

  1. Capital gains - Any increase in the value of assets that have been placed in a trust will not trigger capital gains taxes upon your death. Instead, these capital gains will rest with the trust and will only be triggered upon the sale of the assets. There is a bit of a plot twist here though and that is the 21-year rule. It states that any property held in a trust is deemed to be sold every 21 years unless it is sold or rolled out to beneficiaries before the 21-year deadline. This rule is designed to stop a perpetual deference of capital gains. 
  2. Probate fees - Assets you transfer into a trust are no longer considered part of your estate and therefore will not be subject to probate fees upon your death.

We get that deciphering how best to structure your trust to maximize its potential can be a bit daunting. That’s why our experts are here to help. Get in touch with us today.

Protecting Your Assets

Life throws us curveballs, and sometimes those curveballs come in the form of creditors. A family trust can act as a financial shield, protecting your assets from claims in the event of lawsuits, bankruptcy, or even divorce. This way, your wealth stays protected and can be passed on to your loved ones as intended.

Flexible Distribution

Unlike a will, which simply dictates who gets what upon your passing, a family trust allows you to be more specific and flexible with your wishes. You can set conditions for distributions, ensuring your beneficiaries receive the inheritance responsibly and at appropriate times. 

Think of it as a roadmap to the future you create for your loved ones. You can specify how much they receive, when they receive it, and even how they can use the funds—all to ensure their financial security and well-being.

Peace of Mind

Knowing your family is protected and your legacy is secure brings a sense of peace that money simply can't buy. By establishing a family trust, you can breathe a sigh of relief, knowing you've taken concrete steps to safeguard your loved ones' financial future.

Every family's situation is unique, and the specific benefits of a family trust will vary depending on your individual circumstances. As with any financial undertaking, you should speak with a qualified professional before establishing a family trust. Our team at Givens LLP is happy to help you navigate the complexities of estate planning and determine if a family trust is the right fit for your unique situation.

Together, let's ensure your financial legacy lives on. Contact us today

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