Building a 100-Year Family: How Canadian Families Can Use Structure to Transfer Wealth Across Generations

When families think in terms of generations, not just years, everything changes. The decisions you make today aren’t just about tax — they’re about legacy. About resilience. About making sure your children, grandchildren, and even great-grandchildren have the clarity, opportunity, and tools they need to thrive.

Let’s imagine a Canadian family thinking across three time horizons:20 years (short-term) — transitioning leadership and support,50 years (mid-term) — embedding values and creating independence,100 years (long-term) — preserving wealth and identity through generations.

Here’s how they might use common Canadian structures to shape that journey:

Generation One — Founders (0–20 years): Laying the Groundwork

The first generation — let’s call them Claire and James — have built a successful business and are approaching retirement. Their goals are to secure their financial future, begin empowering their adult children, and reduce taxes down the road.

Tools in play:

• Estate Freeze: Claire and James exchange their common shares for preferred shares, locking in the value of their business. A new family trust is issued common shares to capture future growth.

• Family Trust: Income from investments and the business can now be split among adult children, reducing the family’s overall tax burden.

• Prescribed Rate Loans: They lend $500,000 to the family trust at CRA’s fixed rate. The trust uses this to invest, shifting future income growth to the next generation.

Impact: They’ve preserved decision-making power, minimized future taxes, and created a sandbox for the next generation to start learning — without handing over the keys just yet.

Generation Two — Builders (20–50 years): Growing Independence

Claire and James’s children — Alex and Priya — are now running the business. The trust owns most of the common shares, and they’re reinvesting profits into new ventures and a growing family investment portfolio.

Tools in play:

• Trust Distributions: As their kids mature, Alex and Priya begin distributing trust income to their own children for education and housing. The trust is also used to fund new business ventures with aligned family values.

• Charitable Giving: The family formalizes a charitable arm, using tax-efficient donations and capital from the trust to support causes important to them.

• Second Freeze: As the business value grows further, Alex and Priya consider a second freeze to shift future growth to the third generation.

Impact: The trust becomes not just a tax tool, but a governance tool — reinforcing shared values and ensuring new opportunities align with the family’s vision. Alex and Priya still control the business, but are increasingly acting as stewards, not just owners.

Generation Three — Stewards (50–100 years): Preserving and Reinvesting

Now into the third generation, the business may have been sold, or evolved into an investment company. The original estate freeze is long behind them. Their priorities are different: sustaining wealth, managing complexity, and avoiding drift.

Tools in play:

• Investment Holding Company: Proceeds from the business sale are held corporately. The capital dividend account (funded in part by life insurance payouts) allows tax-efficient distributions.

• Updated Trusts or Foundations: The original trust may have wound up (after 21 years, per Canadian rules), but successor trusts or private foundations carry the family's values forward.

• Education and Governance: Family members are brought together for annual meetings, education sessions, and reviews of family goals. Structures are updated as laws and needs evolve.

Impact: The family’s identity has shifted from entrepreneurs to investors and community builders. Wealth is no longer just about money — it’s about continuity. The structures in place ensure capital is used thoughtfully, fairly, and in a way that reinforces what makes this family… this family.

Final Thought:

When you think 100 years ahead, your priorities change. You stop trying to “optimize” and start trying to orchestrate — how to pass on not just assets, but the values and decision-making tools that gave rise to them in the first place.

And that’s the power of good structure: it’s not just about tax. It’s about keeping the baton moving, with purpose, through every leg of the race.