Related Expertise
- Account collection
- Addition or departure of shareholders
- Bankruptcy and Restructuring
- Buy-Sell Agreement
- Change in the legal form of a company
- Commercial litigation (shareholders, employees or others)
- Company Book
- Consignment Contract
- Contract of partnership
- Convertible debenture
- Corporate reorganization and restructuring
- Corporate resolutions
- Creation of a subsidiary
- Director’s liability
- Drafting of articles of constitution
- Franchising
- Governance and Internal Management
- Implementation of a Tax Memo
- Intellectual Property
- Joint Venture Agreement
- Legal Publicity of Enterprises
- Management Company
- Planning and Tax Litigation
- Preparation and review of commercial leases
- Securities and access to public markets
- Share subscription agreement
- Shareholders Agreement
- Starting a business
- Strategic Partnership
- Taxation and tax litigation
- Term Sheet
- The Letter of Intent of the Offer to Purchase
- Trusts (estate and asset protection)
- Unfair competition, Duty of loyalty
To finally see one’s projects or business finally blossom is a joy, pride and also a relief. However, this is not the end of the adventure! For the situation to continue and to protect your assets in the future, you might consider creating a trust (sections 1260 and 1261 of the Civil Code of Quebec). Trust connects several people: the author or settlor that creates the trust and transfers property, the trustee who will manage the property and ultimately the beneficiaries who receive the benefits.
Trusts are separate entities from their constituent. Property transferred into the trust is no longer the property of the person who transferred it. It is therefore protected and is the subject of separate taxation. A trust may be created by a contract during the lifetime of the settlor or by the latter in his will. There are several types of trusts according to the objectives pursued, the property held and the beneficiaries.
A protective trust serves to insulate the assets that are transferred into it from seizures. For instance, if a personal bankruptcy arises, it would function to the extent that the trust is created in a period of solvency. It can be classified as a family trust if all beneficiaries are family members of the settlor. It can allow a significant income splitting in cases where, for example, a parent pays sums into the trust which will be used to defray various costs for its children. The income of the trust in this case is allocated to children who benefit from lower tax rates.
The trust holding shares of SMEs in turn is created to hold the shares, for example, of the family business. Then it can pay dividends to “dependent” family members who pay little or no taxes. This type of trust allows you to enjoy several tax benefits at the sale or donation of the company to the next generation, in particular, by multiplying the sum which is exempted from capital gains.
The testamentary trust can advantageously split the inherited sums to reduce or cancel the tax payable on the amounts distributed to the heirs.
A trust is an important tool during your lifetime or at your death, to flexibly modulate the transmission of your assets to your loved ones. It allows a greater control over the amount and frequency of payments to be made to beneficiaries. It also facilitates the income splitting for the beneficiaries and the reduction of tax payable. A trust may be discretionary or not, depending on the power of decision kept by the trustee with respect to the original trust agreement.
Finally, regardless of the type of trust, it is important that the document prepared for its creation complies with the legal requirements of validity, otherwise the trust may be deprived of all its effects.