A Canadian citizen who works full time overseas wants to buy a property in British Columbia but the new foreign buyers tax applies. What options might be available to deal with this tax? This series of articles discusses Bare Trusts and how they may help.
Bare Trusts What Are They and How Are They Used?
Arrangements involving bare trusts are often used in a number of different commercial transactions. This article explains what a bare trust is and lists its common uses.
What is a Bare Trust?
In general, a trust exists when one or more persons (the trustees) hold property for the benefit of one or more persons (the beneficiaries) through a settlement of property on the trust by one or more persons (the settlors). There are three essential characteristics of a trust: (1) the settler must show a clear intention that the person who holds the property is to do so in trust for the beneficiaries, (2) the property must be clearly defined, and (3) the beneficiaries must be clearly identifiable. If these three characteristics are present, it is possible for the settler, the trustee, and the beneficiary to be the same person. Although a trust generally may be created orally, trusts involving land must be evidenced in writing to be enforceable. As a practical matter, a written deed, agreement, or declaration of trust will be very helpful in establishing the existence of a trust, particularly (but not necessarily) if the document is put in place contemporaneously with the formation of the trust relationship.
A bare trust is a specific kind of trust. The definition generally accepted at common law is that a bare trust is a trust under which the trustee has no active duties to perform except to deal with the trust properly as instructed by the beneficiaries.
Source: Joseph Truscott.
Business & Income Tax