If a “trust account” is opened by a parent for their children, the certainty of creating a trust corporation would be difficult to prove without a formal trust document. Since the children concerned are most likely minors, the scheme often seeks to take into account the fact that minors do not have the legal capacity to enter into legally binding contracts and, therefore, to acquire financial instruments in their own name. As explained above, trusts do not necessarily have to be written. However, to verify that there is trust, the three certainties must be identified in one way or another. 8. POWER OF EXCLUSION The agent has at all times and at his discretion, by written declaration, the power to remove any beneficiary from the trust fund and the power to exclude any person (beneficiary or otherwise) from the list of persons excluded from the benefit of the trust. This article aims to provide a basic understanding of the most common types of trusts used in our industry. Note that due to the different legal structure in Quebec, the comments contained in these articles do not apply to Quebec trusts. However, the article gives you a general guideline on tax issues related to trusts. Manulife and its representatives do not provide information on the validity and completeness of this document, nor on the tax and legal consequences of the agreement and the attached standard fiduciary statements. We advise you and/or your client to get advice on tax and legal matters.
An agent is an individual or business that is able to hold and manage assets on behalf of a beneficiary under the terms of the trust agreement. Common directors include banks, trust companies or individuals. On the other hand, the beneficiary owns the assets and benefits from the increase in the value of the underlying assets. Manulife needs a written copy of the formal trust agreement or, in the event of informal trust, a document describing Manulife`s terms of trust (commonly known as a declaration of confidence) if it is in trust`s possession. 1.3 The term “trust fund” refers to the assets specified in Schedule A, as well as any additional accounts that may be made from time to time, as well as any income of any kind obtained by or as a result of the ownership of the trust and any additional accounts. It is important to note that the term “direct or indirect” includes a wide range of transfers, including transfers to trusts. People who do not have arm length usually include a child, a grandchild, a great-grandchild, a spouse`s child, the spouse of his child, a brother or brother or brother-in-law or sister-in-law. Trusts are often used to hold assets on behalf of miners. Since minor children do not have the legal capacity to enter into a binding contract or the power to enter into a contract, even if the property is entrusted to them, trusts are used as a mechanism for holding property until the child reaches the age of majority. The rating agency has also received a communication on this matter. The question arose as to whether tax returns for fiduciary accounts were necessary when the reference to paragraph 75, paragraph 2 of the Income Tax Act does not apply (i.e.
in cases of irrevocable trust) and, moreover, whether it is necessary when there is only one beneficiary.