Establish a Trust in Canada

Updated on Wednesday 03rd October 2018

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Trusts are recognized in Canada under the Company and Corporate Law. According to this law, there are various types of trusts local and foreign citizens can establish in Canada. It should be noted, however, that the trust is not considered a legal entity, such is the case of companies.

Below, our Canadian company formation agents explain the elements of the trust and how one can create such an entity.
 

Types of trusts in Canada


Canada is, perhaps, one of the few countries which provide for a large variety of trusts. There are a little over 30 types of trusts which can be established in Canada. These trusts can be further categorized into trusts which are established as part of a testament and trusts which can be used while the settlor is alive.

The following types of trusts are more common in Canada:
 
  •           family trusts which are created as testamentary trusts most of the times;
  •           trusts which can be created for various employment purposes, such as benefit plans and life and health trusts – these are usually created by Canadian companies;
  •           mutual fund and real estate investment trusts which are created for investment purposes;
  •           retirement income trusts, savings trusts, and compensation arrangement trusts are also common in Canada.

Our local consultants can offer more information on the types of trusts available in Canada.
 

Elements of the trusts


A Canadian trust, no matter its type, will have the following elements:
 
  •           the settlor – the person creating the trust;
  •           the trustee – who will act as the administrator of the trust;
  •           the beneficiary or beneficiaries – the person or persons who will benefit from the assets held by the trust.

Our company registration advisors in Canada can offer more information on the elements of the trust.
 

How to create a trust in Canada


The trust is created through a trust deed – a document signed by the settlor – through which the trustee and beneficiaries are appointed. The document must also contain information about the assets to be left in the trust.

Persons interested in creating a trust in Canada must be aware of the fact that trusts are taxed differently based on their type. Trusts can also be used for tax minimization purposes in Canada.

For assistance in establishing a trust in Canada, please feel free to contact us.

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