There are several types of trusts contemplated in the Income Tax
Act, each with specific opportunities, rules and restrictions. One
type, often referred to as a discretionary family trust
("Trust"), is used extensively in tax, family and
succession planning, as it affords enormous flexibility for
ownership structures of Canadian private corporations in achieving
income splitting, multiplying capital gains exemptions, deferring
deemed dispositions occurring on the death of an entrepreneur,
reducing probate fees, and reducing risk by insulating assets from
business risks and other potential creditors.
The Trustees have administrative duties, which should be
properly discharged to ensure the Trust achieves its tax, and
other, objectives. In particular, the satisfaction of those duties
should be evidenced with supporting documentation in a manner
similar to what one might anticipate with respect to the operations
of a corporation, including:
