What Everybody Ought to Know About Trust, Trustee & Trust Agreement

Are you a real estate investor confused about trust agreements and trust relationships and how you can use them to your advantage? Well, you are not alone!
With the April 30th deadline for the underused housing Tax Act (UHT) approaching quickly and the upcoming trust reporting rule requirement, I’ve been getting more and more questions about this topic.
In today's video, I invited Milena Cardinal from Cardinal Law, a real estate investor-focused lawyer, to break down what a trust agreement is, who's considered a trustee, and answer all your burning questions related to trust agreements.
Milena is a rare gem in the legal world. It's hard to find a lawyer out there that's willing to talk about trust agreements and trustee and trust relationships altogether, so we are beyond privileged to learn from her.
Her firm does everything from Real Estate closings to corporate structures, Estate Planning and Estate Administration. So, whether you're a seasoned real estate investor or just starting out, Milena has got you covered.
Get ready to navigate the world of trust agreements with ease! And remember to like, share, and subscribe for more real estate tax tips and insights.
If you have questions for Milena or thoughts after watching this video, leave a comment below, and we’ll respond as soon as possible.
You can also Contact Milena here: CardinalLaw.ca
Key Moments In This Episode
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1:16 - Introducing Milena Cardinal from Cardinal Law
5:38 - Throwing it back to her humble beginnings
7:29 - Intro to Trust Agreement
8:52 - Underused Housing Tax Act (UHT) and trust reporting rule requirement
9:26 - What are Trust agreements and trust relationships?
11:37 - Who is a trustee?
13:49 - Trust relationships in Joint venture agreements
16:06 - The NEW Trust Reporting rule and filing requirements
18:41 - Lawyers VS. trust agreements
21:47 - Can you backdate trust agreements?
25:05 - How do you show intention with trust relationships?
28:00 - Land transfer tax and trust agreements
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Please make sure to speak to a professional that knows your personal situation before making a decision.
If you need to talk to someone on my team, email us at [e-mail].
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DISCLAIMER:
Real estate Tax planning is a personalized decision and will depend on your situation, priorities, and risk tolerance. Consult with your legal and tax advisors to ensure you get the best personalized advice.
The information contained in this video is for general information purposes only.
The information is provided by ECRB Consulting Inc., RealEstateTaxTips.ca, Cherry Chan Professional Corporation and Cherry Chan.
While we endeavour to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability of the article or the information, products, services, or related graphics contained on the presentation for any purpose. Any reliance on such information is, therefore, strictly at your own risk.
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#trustagreements #trustrelationships #trustee #trust #Jointventure #jointventureagreement #JV #taxreturns #landtransfertax #corporation #mortgage #realestatetips #realestatetaxtips #Cherrychan

[@RealEstateTaxTips]

I’ll be speaking at the upcoming iWIN monthly meeting on Saturday, March 25th, on the latest tax updates affecting real estate investors. If you’re interested in joining us LIVE & IN PERSON in WHITBY, sign up here: LINK. marchiwinmeetup.eventbrite.ca/?aff=cherry

[@Lou-wizzeye]

Very Informative podcast ! Legal Terms Defined . Great examples given .

[@RealEstateTaxTips]

Glad you enjoyed it!

[@rosyarraj9176]

You two are a Rockstar's. thank you so much for making this video so much good information as I'm going through this process right now.

[@RealEstateTaxTips]

Our pleasure, Glad it was helpful!

[@lanikrealestateinvestment]

Great content as always Cherry and thanks for bringing Milena on for some insights on Trust agreements and Trustees. I've got two questions, 1- When Corp A holds a property in trust fro Corp B with a Bare trust agreement in place. When the title needs to be transfered to Corp B, will that trigger LTT, since it's not personal to Corp transfer? Question 2 - When a Corporation in on Title in a JV deal, is it the responsibility of the Corp to file the Trust Reporting or it's the Corp shareholders that have to file the Trust reporting? ......Thanks and look forward to your response.

[@RealEstateTaxTips]

It sounds like you have a very specific scenario and I don't want to have any broken telephone, it's best you sit down with an accountant and a lawyer to discuss in detail.

[@cathyjose]

hell0, this is very informative, Ive got question though, i bought a property for my flipping business, then i opened a corporation, my lawyer suggested that instead of transferring the land title, we do the bare trust agreement, where I hold the property in trust for my corporation then who is going to file the tax once the property is sold? Is it the corporation? thank you

[@RealEstateTaxTips]

Who's responsible to file taxes ultimately goes back to who truly owns the property. Best to speak to a real estate accountant that knows your situation. If you don't currently work with one, feel free to contact us at [e-mail] or 416-548-4228

[@mpTraveller87]

In the scenario where investors buy a property in their name in trust for the corp, have a trust agreement set up properly as described - is it necessary to actually transfer from personal ownership to the corp down the road or can it be kept as is (in personal names) until the sale possibly years down the road? (all the time reporting income, expenses and capital gains in the corp)? PS: great content and very well explained - thank you !

[@RealEstateTaxTips]

Hi Margaret, you are not required to transfer the ownership, but obviously with the UHT issues and the upcoming trust reporting in 2023 (deadline March 2024), you might want to consider transferring.

[@mpTraveller87]

@@RealEstateTaxTips from a tax perspective or simply from a filing requirement perspective?? Because transferring is not a trivial task! Or is it too soon to tell?

[@lilyho8948]

What happens in a situation where the JV agreement does not reference a trust agreement n(or no trust agreement is created) and the JV is between individuals who are solely on title, and a corporation? Do the owners on title need to file UHT (assuming they are Cdn citizens or permanent residents)?

[@RealEstateTaxTips]

It's best you consult with a lawyer to understand the situation better - better yet, consult with your lawyer who drafted up your JV agreement - to determine if a trust exists.

[@modenim]

My wife and I started investing is real estate along before we knew anything about corporations and trusts. We have several properties in our names. When it comes time to transfer these properties to our children they'll all get binged with capital gains + land transfer taxes? Are there any tax advantages to at least having a revocable or irrevocable living trust?

[@RealEstateTaxTips]

It's a bigger conversation than having a trust. You might or might not be exposed to land transfer taxes but you could still be exposed to capital gain tax. There's no one size fits all solution - we just did a presentation on estate planning - realistically, somehow, someone at some point has to pay the tax. Either you or your kids.

[@modenim]

@@RealEstateTaxTips Thanks, I actually watched the estate planning one when you did it live. I get lost sometimes when trying to follow everything being said. A trust is still a good way to avoid probate though, yes?

[@saimaalam6651]

If you have a duplex and one of the units was vacant, is it subject to the vacancy tax?

[@RealEstateTaxTips]

Which one? Depends on the cities, there're different type of taxes involved. If you refer to UHT, as long as you're not non-resident of Canada, generally speaking, you're exempted.

[@saimaalam6651]

@@RealEstateTaxTips Thank you. Who completes Part 3 of the form pertaining to multiple properties? Everyone or ONLY those who are neither Canadian citizens nor permanent residents?

[@rickroskin3709]

A key question is in a usual purchase of a property in both spouse's name as a joint tenancy are either of them trustees? Some videos suggest they are. In this scenario there is no formal partnership set up.

[@lilyho8948]

What if the property purchased in Oct 2022 was a legal duplex and vacant, and it remained vacant for the rest of 2022 due to renovations and then turned into a non-legal fourplex in 2023? My interpretation would be that the vacancy in 2022 would exempt need to file UHT (and let's assume the owners are Cdn citizens)?

[@RealEstateTaxTips]

That seems like a lot of assumptions there... you also use "owners" meaning multiple owners... then it again goes back to whether its carried out as partnership, JV, and all the other factors to determine if the owners are affected owners or not...

[@gregsteele8385]

In the case where a husband and wife are on title to a property and a bare trust was created at the time of the original purchase of the property to make a corporation be the beneficial owner, do both the husband and wife need to complete underused housing tax returns as trustees (the form doesn't have a way of specifying more than one owner)? Also, does the corporation have to complete an undersued housing tax return since it is the beneficial owner?

[@RealEstateTaxTips]

It is up for interpretation whether the corp has to do filing or not at this point. CRA has specified one thing but hasn't really issued an opinion to clarify so we are still waiting. As for husband and wife, each is responsible for one filing...

[@gregsteele8385]

@@RealEstateTaxTips Thank you for getting back to me so quickly. This seems to just be a mess. When I spoke to Business people at the CRA, they had no idea and told me to talk to the Individual side. The Individual side told me to talk to the Business side but eventually said that only the corporation had to file but couldn't tell me how to complete the Trust part of the form as there is no Trust Account Number for a Bare Trust. You have a different and effectively almost opposite understanding. Either way, no one seems to know what to enter for the Trust Account Number and their online return provides an error if you leave it blank or enter na. I faxed a request for an interpretation to the CRA so we will see if that gets me anywhere.

[@RealEstateTaxTips]

@@gregsteele8385 I have attended multiple training session to be able to publish a video on this. There are many smarter accountants out there interpreting the law. We read them based on the law. Remember CRA isn’t responsible for what their agents are saying either on the phone.

[@mpTraveller87]

@@gregsteele8385 wow! Yours is not an isolated case. What a mess indeed.

[@gregsteele8385]

@@RealEstateTaxTips I requested a ruling / interpretation regarding how to complete the underused housing tax return for a bare trust. I just had a phone call to explain the interpretation. I will eventually get something in writing but it likely won't be until after April 30. In case this may be helpful to any of your other clients, here is what I was told. Owner is whomever is listed in the land registration system as being the owner so that means that my wife and I are both considered owners but my corporation is not considered to be an owner for this purpose. When we complete the form, we have to put "Yes" for box 120, and leave line 125 blank since there is no trust account number. Their online form does not accept blank or n/a for line 125 so we have no choice but to manually complete a form and mail/ fax it in.

[@rationalevidence9095]

If i currently own a rental property in Ontario, but am planning to sell it in the next 5 years, is there any way to avoid paying tax on the capital gains? (put it into a trust maybe??)

[@RealEstateTaxTips]

If you are selling a property to a 3rd party then Capital Gains will be taxed. If you are planning on keeping the property within the family then scheduling a meeting to explore your options would be recommended.

[@rationalevidence9095]

@@RealEstateTaxTips Thanks for the quick reply, and it's just 1 big capital gain in the year i sell it?