Bare Trusts: Advantages and Disadvantages

Bare Trusts

A bare trust is a legal structure that facilitates the separation of legal and beneficial ownership over a property.

Generally, it's used in a real estate context. A bare trustee company is created which is a BC corporation that holds the legally registered title on the property.

The beneficial ownership remains with the person who originally purchased the property. The beneficial owner is the person or persons who continue to make all arrangements; they're responsible for leasing the property, receiving rents and reporting income.

The beneficial owner is the real owner of the property.

The bare trustee company is the one that is actually on the title, the company name is registered in the land title office (the “LTO”). From a tax perspective, the trustee company isn't going to be reporting any taxes at all because they don't actually beneficial ownership of the property.

The 2 Best Strategies to Optimize Your Family Trust’s Taxes

In this article, we’ll cover the following topics:

Family trust tax planning strategies

Strategy 1: Multiplication of lifetime capital gains exemption

Strategy 2: The prescribed rate loan strategy

Let’s start by acknowledging that family trusts are a very complex subject. As such, this article is not meant to be comprehensive and there are many nuances that require expert legal and tax advice. To determine whether or not a family trust is right for you, it’s best to speak with your tax advisor and lawyer.

That said, there are two important tax planning strategies to keep in mind when considering a family trust.

4 Things To Consider When Selling Your Business

You might be selling your business because you're ready to retire, because you want to pass it down to the next generation, or perhaps because you have just moved on and you want to pursue different business opportunities. There are some really key items that you're going to want to start thinking about.

Are you structuring your sale through assets or shares?

So goes the old saying, acquire assets, sell shares, with the notion being that it is somewhat more tax beneficial to purchase shares and slightly more tax advantageous for the seller to sell their shares. On the asset side, the rationale for this was that there used to be certain tax factors connected with a company's goodwill that made it highly favorable for a purchaser to buy those assets; those advantages are no longer as important as they once were. However, on the selling of shares, this is still very much the case. Because in Canada, there is a provision known as the lifetime capital gains exemption, which allows you to deduct up to $850,000 of the capital gain on the sale of your business. That is the price difference between the adjusted cost base, or the original purchase price of the firm, which is frequently minimal if you founded it yourself, and the real exit price. If you were able to take full advantage of the lifetime capital gains exemption on the sale of your company, and your company was worth $850,000.

Below are 10 key steps to ensure your estate plan is successful:

1. Document Storage

Make sure to store your estate planning documents safely. If you have a safe deposit box, store your important papers there. Give your executor a copy of your estate planning documents and advise them on where the originals are stored.

2. Make copies of your Will and provide to your executor and beneficiaries

It is in your best interest to provide a copy of your will to beneficiaries. This reduces the possibility of confusion. It is unlikely you will ever change your will, but even if you do, providing a copy of your Will to your beneficiaries does not mean you can’t change it.

3. Inform your Power of Attorney

If you have power of attorney, they should be able to access your safe deposit box. It may be a good idea to have your attorney as a signatory on your safe deposit box. Additionally, keep one original Power of Attorney in your home so that your attorney can retrieve your documents.

4. Create a list of assets and liabilities

Parr Business Law can provide you with an estate planning checklist. Please contact us. Additionally, many financial institutions provide an estate planning checklist. Be sure to also include the names of your lawyer, accountant, and other contact people. Additionally, make sure your list of assets and liabilities is always readily accessible to your executor and your attorney.

5 Professionals to Consult Before Starting Your Small Business

There are many important steps that need to be taken prior to starting a small business. Consulting with professionals can help prevent negative legal consequences for you and your business down the line. Here are some of the most important professionals you should consult before starting your business.

1.An Accountant

Prior to starting a small business, it is important to have your finances sorted and learn about taxes, both of which an accountant can help with. An accountant will also be able to review your business plan and budget and ensure that your numbers are all correct.

Your accountant can also be a trusted advisor as your business grows. He/she may be able to help you think over opportunities that present themselves along the way.

What should you watch out for in contracts?

There are numerous reasons why you may enter into a contract while you are running a small business. The important part is to always know exactly what you are agreeing to and how a breach of contract may affect you and your business. Here are some factors you should consider before signing a contract…

1. Know who you’re dealing with

A contract will tie you with another party for a specific amount of time. It is therefore important that you conduct thorough research and get to understand exactly who the other party is. If it is a company you are dealing with, you can check with the Better Business Bureau to check their reputation. A small business lawyer may also be able to help if they have had dealings with this other party in the past.

5 Mistakes to Avoid When Incorporating Your Business

Incorporating your small business is a big step and if done correctly, it can result in great growth for your business. However, you need to be aware of some common mistakes that small business owners tend to make when incorporating their business.

1.Not naming your business

Many people are so concerned with the process of incorporating their business that they may forget to choose a name for their company. This does not stop the corporation from operating, but instead an incorporation number is used as its legal identifier. This number is used in place of a name for all business-related activities. It is therefore recommended to prepare a company name beforehand, as it will help the growth of your business from a branding perspective.

Trademarking 101

What is a trademark?

A trademark is defined as letters, words, sounds, or designs that are used to distinguish one company’s goods and/or services from another. Over time a trademark evolves from representing goods and services to also representing the reputation of the company.

Types of trademarks

Ordinary trademark: includes words, designs, tastes, textures, moving images, mode of packaging, holograms, sounds, scents, 3D shapes, colours, or a combination of these are used to differentiate your goods and/or services from other companies.

Certification mark: can be licensed to multiple people or companies. They are used for the purpose of demonstrating that certain goods/services meet a defined standard.