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Email this5:41 pm
March 17, 2018
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I saw someone posted a link to this article in Canadian Money Forum. It's a bit concerning if we have to start annually filing a T3 Trust Income Tax and Information Return for trusts we may not even know about. eg. a parent's account with over 50K in deposits that you are cosigner on, a type of blind trust.
Article:
https://archive.ph/6Krac
11:37 pm
April 6, 2013
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That Globe & Mail article New tax-filing obligations await many unsuspecting Canadians in 2024 contradicts itself.
It doesn't look like there is a trust with a joint account because there's no separation of legal ownership and beneficial interest while all the joint owners are alive. Parent #1, Parent #2, and Child are the legal owners with unequal 50%, 50%, and 0% beneficial interest.
If the 0% beneficial interest of the Child creates a trust, then maybe the Child could kick in a few dollars so that the beneficial interests are 49.9%, 49.9%, and 0.2%?
The existence of a trust is a trust law question and not a tax law question. All the subject matter experts quoted are accountants and not estate or trust lawyers.
5:49 am
March 17, 2018
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Norman1 said
That Globe & Mail article New tax-filing obligations await many unsuspecting Canadians in 2024 contradicts itself.It doesn't look like there is a trust with a joint account because there's no separation of legal ownership and beneficial interest while all the joint owners are alive. Parent #1, Parent #2, and Child are the legal owners with unequal 50%, 50%, and 0% beneficial interest.
If the 0% beneficial interest of the Child creates a trust, then maybe the Child could kick in a few dollars so that the beneficial interests are 49.9%, 49.9%, and 0.2%?
The existence of a trust is a trust law question and not a tax law question. All the subject matter experts quoted are accountants and not estate or trust lawyers.
I certainly hope so. I have an elderly parent who I have signing rights on their bank accounts, but they are not officially joint accounts. I read the article, was a bit confused, but figure I won't file any T3s and hope for the best 
Here's the link to the discussion at the other community in case anyone wants to read their discussion there. So far they don't really know what to make of it either.
6:20 am
April 6, 2013
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It is pretty hard to argue that one is a trustee if one doesn't hold legal title and one just has signing authority on a bank account or trading authority on a brokerage account.
The situation of a parent's in-trust brokerage account with investments for a child is different. Parent is legal owner of the account for the benefit of the child. Parent has legal title. Child does not have legal title but has 100% beneficial interest. Definitely a trust there.
5:59 pm
March 17, 2018
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Norman1 said
It is pretty hard to argue that one is a trustee if one doesn't hold legal title and one just has signing authority on a bank account or trading authority on a brokerage account.The situation of a parent's in-trust brokerage account with investments for a child is different. Parent is legal owner of the account for the benefit of the child. Parent has legal title. Child does not have legal title but has 100% beneficial interest. Definitely a trust there.
I found a new video on this topic. The CPA suggests for people having signing privileges on their elderly parents' accounts, this creates a "Pecore Trust", which means you have to file a separate T3 trust income tax return for EACH bank account your parent has. You have 90 days from year end, so before March 30. The penalty will be roughly 2500 per account for not filing.
6:46 pm
April 6, 2013
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The person doing video is not a CPA. As well, in the Pecore case, the Supreme Court of Canada ruled the survivor was not holding the funds in trust for the estate and she could keep the funds from the joint account she had with her deceased father.
7:32 pm
March 17, 2018
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Norman1 said
The person doing video is not a CPA. As well, in the Pecore case, the Supreme Court of Canada ruled the survivor was not holding the funds in trust for the estate and she could keep the funds from the joint account she had with her deceased father.
Well, hopefully he's wrong, I wasn't planning on taking myself off my mother's accounts anyways since banks give you a hard time if you just show them a power of attorney, and I wasn't planning on filing the T3 trust.
7:47 pm
April 6, 2013
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If one isn't one of the owners of the account, then one cannot be a trustee of the account! Trustee has to hold ownership/be on the title of the asset.
A power of attorney is not a trustee.
7:53 pm
March 17, 2018
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Norman1 said
If one isn't one of the owners of the account, then one cannot be a trustee of the account! Trustee has to hold ownership/be on the title of the asset.A power of attorney is not a trustee.
At the moment, I have a general power of attorney through a lawyer AND signing authority on my mom's bank accounts at the banking level, but they are not joint bank accounts. I would only access her bank account if she is no longer able to sign a cheque. So I'm theoretically both power of attorney AND trustee according to that guy.
10:21 pm
April 6, 2013
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I don't take that guy seriously.
From 2:30 to 2:50, he discusses the Pecore decision and said the ex-husband didn't get any of the money because the joint account in question was considered to be a trust and not a joint account. That's actually false.
Supreme Court actually ruled that the ex-wife had successfully shown it was not a trust. Consequently, when her father passed away and she became the only surviving owner of the joint account, she not only had legal title to the account but also the beneficial interest to the account. With both legal title and the beneficial interest, she had both control of and entitlement to the account.
It is going to cost some money. But, it would be re-assuring to get some legal advice about trusts and your situation from a lawyer, like the one who did the power of attorney. Perhaps, also ask the lawyer for an informed explanation about the Pecore decision: Pecore v. Pecore, 2007 SCC 17.
3:33 am
March 17, 2018
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Norman1 said
I don't take that guy seriously.From 2:30 to 2:50, he discusses the Pecore decision and said the ex-husband didn't get any of the money because the joint account in question was considered to be a trust and not a joint account. That's actually false.
Supreme Court actually ruled that the ex-wife had successfully shown it was not a trust. Consequently, when her father passed away and she became the only surviving owner of the joint account, she not only had legal title to the account but also the beneficial interest to the account. With both legal title and the beneficial interest, she had both control of and entitlement to the account.
It is going to cost some money. But, it would be re-assuring to get some legal advice about trusts and your situation from a lawyer, like the one who did the power of attorney. Perhaps, also ask the lawyer for an informed explanation about the Pecore decision: Pecore v. Pecore, 2007 SCC 17.
Thanks for all your insights ! Another strategy I was thinking of ( besides ignoring this new law or getting costly professional advice ) was to retain my general power of attorney, and go into the bank with my mom while she still can, and remove my joint signing authority, but at same time get my mother internet access and then use her internet access to handle her accounts in the future.
4:25 am
October 5, 2017
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Briguy said
Thanks for all your insights ! Another strategy I was thinking of ( besides ignoring this new law or getting costly professional advice ) was to retain my general power of attorney, and go into the bank with my mom while she still can, and remove my joint signing authority, but at same time get my mother internet access and then use her internet access to handle her accounts in the future.
A wrinkle ?
I too wanted to remove my child (who is over 18) from my joint account(s) at 2 different FI's.
One bank had no problem removing the joint , but the other bank told me I had to "delete the current account" and open a new one with just my name on it.
And since this was a chequing account with links to CRA and others I did not follow thru.
In my opinion, joint accounts are not trusts because all parties are legal and beneficial owners according to the CSR I talked to at CRA.
And if I am wrong then there are millions of joint accounts that would have to file T3's and I am sure this is not what CRA has intended.
5:31 am
September 11, 2013
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It's actually not what CRA intended, it's what the government of the day who brought in this new legislation intended, CRA just administers the tax law as it understands it. I'm pretty sure CRA isn't going to go after our joint bank accounts without a green light from the government, especially one looking for votes wherever it can these days.
I agree with those who don't think this affects your everyday joint bank account, though it would have been prudent for the government to have made its intentions with these new requirements clear to the public, what they were intending to fix with these new requirements, and that in fact your everyday joint bank account with relatives is not affected. Especially as many folks might benefit from unduly alarming and directing people to pay for "professional" advice about their joint bank accounts.
7:24 am
October 27, 2013
Online
An article from a legal firm on bare trusts https://www.advotaxlaw.ca/post/a-basic-guide-on-bare-trusts-for-canadian-taxpayers
8:24 am
April 6, 2013
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bhuc said
…
In my opinion, joint accounts are not trusts because all parties are legal and beneficial owners according to the CSR I talked to at CRA.
…
That makes sense and lines up with reality. For example, all the owners of an RBC joint account actually do have beneficial interest under the account agreement.
Each owner has agreed to give RBC a right of setoff on all the money in the joint account to satisfy any debts owed to RBC by any of the joint owners. No conditions involving which joint owner contributed how much to the account.
This is from Personal Deposit Accounts - Disclosures and Agreements:
10. Application of Funds
Even if we [Royal Bank of Canada and its subsidiaries and affiliates including Royal Bank Mortgage Corporation) and Royal Trust (which means Royal Trust Corporation of Canada or The Royal Trust Company in Quebec)] have not made any demand and even if the amount is not due and payable, and even if other third parties have made demands against you, we may at any time, without notice, apply the funds on deposit in an Account to any debt or obligation you or any one of you, if this is a joint Account, owe to the Bank.
If such debt or obligation is in a currency other than the currency of the Account, we may use all or part of such credit balance to buy any currencies that may be necessary to pay the debt or obligation.
This right is in addition to any rights we may have at law or in equity to setoff or to compensation, which we reserve against you, and if this is a joint Account, against each of you jointly and severally.
…
That's quite a benefit from being one of the joint owners of a joint account in contrast to just having signing authority through a power of attorney or an other arrangement.
Is that not one of the risks of using joint accounts? A joint account holder may restrain himself or herself to just his or her contributions of maybe zero to the account. But, that restraint does not bind his or her creditors.
Creditors of a trustee do not have access to assets that the trustee holds in trust for someone else.
10:32 am
March 17, 2018
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Everyone here keeps talking about joint accounts, but I'm referring to my mother's bank account WHICH IS NOT A JOINT ACCOUNT, but is an account on which I have SIGNING AUTHORITY , which I will only use if she becomes incapacitated.
I'm going to do nothing for the time being, and hope this new law doesn't apply to my situation.
11:10 am
September 11, 2013
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Briguy, maybe you could go to the bank and ask if in their eyes having signing authority means they now view the account as one being held in trust, as a trust account? If they say no maybe they'd confirm that in writing for your records. (Also for joint accounts, maybe people can ask the same question of their bank.)
My wife is a trustee of some formal trusts, I just waited about 40 minutes to be put through to CRA's "special unit" (per agent) dedicated to helping people complete re. this matter the new Schedule 15 for trust returns and the guy barely even knew what a trust was, seemed to have never heard the term "settlor" before, kept going away for a few minutes after every rudimentary question, etc, so I thanked him for his help and got off as soon as I could. It was truly unbelievable.
Note the penalties for not complying with the new requirements seem unusually harsh, large amounts can accumulate quickly for not filing.
11:13 am
March 17, 2018
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Bill said
Briguy, maybe you could go to the bank and ask if in their eyes having signing authority means they now view the account as one being held in trust, as a trust account? If they say no maybe they'd confirm that in writing for your records. (Also for joint accounts, maybe people can ask the same question of their bank.)My wife is a trustee of some formal trusts, I just waited about 40 minutes to be put through to CRA's "special unit" (per agent) dedicated to helping people complete re. this matter the new Schedule 15 for trust returns and the guy barely even knew what a trust was, seemed to have never heard the term "settlor" before, kept going away for a few minutes after every rudimentary question, etc, so I thanked him for his help and got off as soon as I could. It was truly unbelievable.
Note the penalties for not complying with the new requirements seem unusually harsh, large amounts can accumulate quickly for not filing.
Thanks, Hopefully I'll go to the bank(s) with my mother ( 87 years old ) one of these days and try to figure that out.
11:15 am
October 27, 2013
Online
Briguy said
Everyone here keeps talking about joint accounts, but I'm referring to my mother's bank account WHICH IS NOT A JOINT ACCOUNT, but is an account on which I have SIGNING AUTHORITY , which I will only use if she becomes incapacitated.I'm going to do nothing for the time being, and hope this new law doesn't apply to my situation.
Folks do get sidetracked relatively easily but in fairness, the overall issue bears discussion. My take is you do not have to worry about your situation, similar to Norman's post #4, but it is still worth your while to read the link I provided from the legal firm. I have not looked at it closely enough but I suspect it is less than clear about specific situations.
11:27 am
September 11, 2013
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Briguy, your mother likely doesn't need to go to the bank re this. I know when my parents were elderly and ailing the last thing they wanted was me to ask them to do anything re their money, they had entrusted all of that to me and wanted to concentrate fully on other things. So I used to go to the bank, see their financial advisor, etc alone. Just fyi.
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