Ep. 128 - Trusts for Canadian Farm Families: Why, When, & for Whom?
From WinEH! Podcast · 24:43
Show by Winnie Lau
A trust isn't the goal. The question is what you'd need one to accomplish. Part 5 of 6 of Keeping the Farm or Ranch Together. A trust is an arrangement, not a separate legal person. A settlor (or, in a will, a testator) creates it, trustees manage the assets, and beneficiaries receive the income or the capital. Former tax lawyer Bryan McNulty explains that newer rules have limited income splitting through trusts, but trusts still offer real value in two areas. The first is the estate freeze. Parents lock in the current value of their company shares, and a family trust holds the future growth. That can cap the parents' tax at death, keep options open about which child eventually takes over, and, if the shares qualify, potentially let several family members each use their lifetime capital gains exemption. The second is control. A trust can hold life insurance on a child or grandchild so the policy can't be cashed in by that person or a future spouse, and life insurance isn't subject to the trust's 21-year deemed disposition rule. Bryan is equally clear about the costs: setup and legal fees, annual trust tax returns, trustee resolutions, a separate bank account, and the need for a trust lawyer and a tax specialist rather than a generalist. For most operations just starting out, a trust comes later, once the business has grown significantly in value. QUESTIONS THIS EPISODE ANSWERS What is a trust in Canada, and what do the settlor, trustees and beneficiaries do? How does a family trust work with an estate freeze? What is the 21-year rule for trusts? Can a trust own life insurance on my children or grandchildren? Does a trust protect assets in a divorce? What does it cost to set up and run a trust? WHO IT'S FOR Families with a growing incorporated farm or ranch, and parents or grandparents who own life insurance on the next generation and want it protected. HOSTS AND GUEST Winnie Lau and Lacy Rowan, Ranch Your Way. Life insurance advisors who help farm and ranch families plan with The Infinite Banking Concept®. Bryan McNulty, former tax lawyer with more than 25 years in tax and estate planning, including drafting wills and trusts. A NOTE ON TIMING Recorded December 4, 2024. Trust tax and reporting rules can change; confirm current requirements with a qualified professional. NEXT IN THE SERIES Part 6: Keeping the farm or ranch together. This episode is for education only and is not tax, legal or financial advice. Get Farming Without The Bank — the Canadian version, includes audio. Start at ranchyourway.com Watch the full series: youtube.com/@WinEHpodcast
More episodes of WinEH! Podcast
More episodes
- Ep. 130 - What Happens to Your Cash Value When You Die
- Ep. 129 - How Non-Farm Assets Can Cost You the Farm Rollover & Capital Gains Exemptions
- Ep. 67 - Husband and Wife Farming Together: The Scary Truth About Working With Your Spouse
- Ep. 127 - Canada Has No Estate Tax, So Why Can Death Benefit Trigger a Huge Tax Bill?
- Ep. 126 - Equal vs Fair: Dividing the Farm When Not Every Child Wants to Farm
- Ep. 125 - Where to Start Farm Succession Planing and Where Life Insurance Fits
- Ep. 124 Structuring Your Farm for Succession: Corporations, Holdcos & Rollovers
- Ep. 123 - Should Whole Life Insurance Disappear From Agriculture? We're Answering Back.
- Ep. 122 - When Mother Nature Calls the Shots: Are You Financially Prepared?
- Ep. 121 - Land Rich, Cash Poor: Who Really Controls Your Wealth?
PodSearch is a free, independent podcast search engine. Read about PodSearch, the privacy policy or contact us.