When making a family trust election, determining who will be included in the family group is critical. This paper outlines who will be in the group, who will not be in the group, and when people and entities will shift from being in the group to being outside of it. As the impact of not properly identifying the group can be that the trustees of the trust, or the directors of the corporate trustee, can be personally liable for 48.5% tax on distributions to entities outside the group, this issue has a significant impact on the administration of a trust that will be making, or has made, a family trust election. Matters covered include:
- what is the family group?
- why is it important?
- who is in?
- who is out?
- illustrations of both.