bare trust

By services, 17 November, 2016

Because of lender requirements respecting the taxpayer’s purchase of a new home, on the closing of the purchase, a friend of the taxpayer (Dr. Akbari) acquired an undivided 1% interest in the home, with the taxpayer and his spouse acquiring the remaining undivided 99% interest. On the date of closing, the parties also signed a trust declaration in which Dr. Akbari acknowledged that he was holding the 1% interest in trust for them as beneficial owners and that he would convey that interest on demand (which subsequently occurred to their son with the mortgage lender’s approval).

Where a settlor transfers property to a trust having the characteristics according with RC's understanding of a bare trust (the settlor is the sole beneficiary of income and capital during her lifetime, she retains the ability to revoke or amend the trust at any time and has the unfettered ability to deal with the property as she sees fit during her lifetime) but the settlor also stipulates that income and/or capital interest of other beneficiaries, which are contingent during her lifetime, will vest upon her death, the trust will be considered to be a bare trust until her death.

By services, 28 November, 2015

A trust established by the taxpayer (apparently intended to be a revocable living trust for US tax purposes) was found to be a bare trust. After referring inter alia to the definition of Professor Waters of a "bare trust" as "a trust where the trustee or trustees hold property without any further duty to perform except to convey it to the beneficiary or beneficiaries upon demand," as well as to the narrower definition provided by Revenue Canada in Income Tax Technical News No.