In some cases, the trust agreement sets out all the details of how the agent will use the property. We call this type of agreement a binding trust. However, if the agreement provides that the agent can decide when and how the assets will be distributed to the beneficiaries, we call this type of agreement a discretion trust. There are many reasons why someone would choose to create a trust. Cindy and Marsha are partners. Together, they face the possibility of buying an asset that could potentially benefit the partnership. But since she wants all the profits to be themselves, Cindy buys the asset for herself. This could be seen as a breach of Cindy`s fiduciary duty of loyalty to her partner. Assuming Cindy makes the deal and earns 100,000 $US. The court could decide that Marsha is entitled to half of that money because Cindy owed her a fiduciary duty. The court would find a trust based on the legal fiction that Cindy Marshas held $50,000 for her. This relationship is also comparable to a relationship of trust, even if the parties have never declared or expected the creation of a trust. A trust is a division of ownership between its “legal” and “economic” assets.
The “agent” is the rightful owner of the property and he or she holds the property only for the benefit of the owner of the economic or “just” owners. The right owner of the trust property is the “beneficiary”. The person who funds the trust in general (who is usually the person who creates the trust) is called “Grantor” or “Settlor”. Like revocable living trusts, irrevocable trust is created during the Grantor`s lifetime. However, these trusts cannot be revoked by the Grantor, as the Grantor`s ability to modify, modify or supplement irrevocable trusts is generally strictly limited. The licensor may retain some control over the trust and the extent to which this is advised depends on the objectives of the succession plan to which the trust belongs. The most serious problem with the revocable trust is that it is effective, but perhaps insufficient to achieve many estate planning goals. Since the licensor has the right to revoke the trust at any time and/or to withdraw its assets for the most part for any legal purpose, the assets of the trust are considered to belong directly to the licensor. There have also been some communications from the CRA on this subject. The question arose as to whether tax returns are necessary for fiduciary accounts for which Article 75(2) of the Law on income tax is not applicable (i.e.
B in case of irrevocable trust) and if it is necessary to do so if there is only one beneficiary. In Document No. 9833995, the CRA clarified that a trust, including in the case of an “In Trust For” account, must normally be subject to a T-3 return for the trust, regardless of whether section 75(2) is accurate or not. In particular, the agent should submit a T-3 return each year in which the trust has transferred capital. . . .