The TaxLetter: Discretionary Trusts - Proper Administration

Last month I wrote on the ABCs of a discretionary family trust. The article highlighted some of the benefits of family trusts, such as income splitting (as long as the right structure is in place), and exercising flexibility on how property may eventually be distributed among the next generation.  So, you may have decided to go forward and set up that family trust.  Now what? What should you be doing, and what should you be aware of when it comes to the CRA?

Items that the CRA has focused on over the years in relation to discretionary trusts include:

1. the trustee's qualification, expertise and experience;
2. the amount of fees received by the trustee, if any;
3. a list of the trustee's duties and responsibilities with respect to the subject trust;