Beneficiaries may also be liable for the payment of inheritance tax if the trust-settlor dies within seven years of the trust being set up, as simple trusts are treated by the tax authorities as potentially tax-exempt transfers. However, no inheritance tax is due if the setlor survives these seven years. There is no tax implications for the person who creates a simple trust because he or she waives the right to the assets when they are transferred to the trust. This legislation generally applies to all trusts and makes the transfer of ownership from the beneficial owner to the agent a taxable benefit within the meaning of the GST. The same treatment applies when ownership of the fiduciary property is transferred to the beneficial owner. The agency`s provisions in section 177 of the Act apply in situations where the agency relationship between the mere agent and the beneficial owner is not passed on to third parties. means a person holding legal title in trust in property for the benefit of another person (the beneficiary). (Dictionary of Black Law) Over the years, there has been a lot of discussion about the real role of an agent, perhaps even more so in terms of trust. There is still no unanimity within the legal community on the nature of the relationship between the trustee and the beneficial owner. Once one or two beneficiaries are defined for simple trust, the decision can no longer be overturned. While the obligations of the agent may generally indicate a dominant agency relationship in a simple position of trust, it is necessary to examine the nature of the obligations contemplated by the trust in order to determine whether the agency`s principles and not the principles of trust are applicable.
A certain type of trust agreement is called a simple trust. Unlike most trusts where, subject to the terms of the trust, the administrators are the definitive authority to determine the management and/or distribution of the trust assets to the beneficiaries, the trustees do not participate in the active management of the trust in a simple trust, but rely on the instructions of the beneficiaries of the simple trust. As already mentioned, the trustee only owns the legal title in a simple trust and transfers this title upon request, in accordance with the specific instructions of the beneficial owner. The mere agent would not be regarded as the exercise of a commercial activity concerning fiduciary ownership and, therefore, the trust would not be required to register under the law. The mere agent should register as a trustee or agent if the agent`s income from his or her business activities (and related persons) and not the trust`s activities exceed the threshold for small suppliers. For example, the agent may earn trust fees or fees for the operation of the trust property as an agent for the beneficiaries. In this situation, all authority and responsibilities for the management and/or transfer of ownership would likely be reserved for the beneficial owner in the trust document. Consequently, the latter, and not the mere trust or trustee, are involved in commercial activities related to the immovable property. To the extent that the beneficial owner is not qualified for small supplier status or for any of the above exceptions, registration under the law would be required. If there is more than one beneficiary of the trust, the small provider threshold is calculated on an individual basis, each being a person within the meaning of the law, unless the beneficiaries are related persons within the meaning of the law. The disadvantages of setting up a fiduciary trust company are the costs.
The cost of creating a simple trust is that you have to create a BC Corporation and you also need to create a fiduciary agreement….