When it comes to estate planning or asset protection, a bare trust agreement may be a useful tool to consider. In Ontario, Canada, a bare trust agreement is a legal document that outlines terms and conditions for a trustee to hold a beneficiary`s assets and manage them on their behalf. This type of trust is also known as a simple trust or naked trust and is popular among parents who wish to transfer assets to their children or individuals who want to protect their assets from creditors.
A bare trust agreement is beneficial for both the trustee and beneficiary. The trustee is responsible for managing the assets and investing them appropriately, while the beneficiary has a right to the assets, including the income generated from them. In a bare trust agreement, the trustee has no discretion over the distribution of assets and must follow the terms outlined in the agreement.
Here is a sample bare trust agreement template that can be used in Ontario:
Bare Trust Agreement
This Bare Trust Agreement (the “Agreement”) is made on [date] between [Trustee Name] (the “Trustee”) and [Beneficiary Name] (the “Beneficiary”).
Recitals:
1. The Beneficiary desires to have the Trustee hold certain assets in trust for the Beneficiary.
2. The Trustee desires to hold such assets on behalf of the Beneficiary.
Agreement:
1. Establishment of Trust
The Trustee agrees to hold the assets identified in Schedule A attached hereto in trust for the Beneficiary.
2. Investment and Management of Trust Property
The Trustee shall invest and manage the trust property in a prudent and reasonable manner, taking into account the Beneficiary`s best interests.
3. Distribution of Trust Property
The Trustee shall, upon the written request of the Beneficiary, distribute the trust property to the Beneficiary in accordance with the terms of this Agreement.
4. Termination of Trust
This trust shall terminate when the Beneficiary reaches the age of [age]. At such time, the Trustee shall distribute the trust property to the Beneficiary.
5. Trustee`s Compensation
The Trustee shall be entitled to compensation for their services, as set out in Schedule B attached hereto.
6. Governing Law
This Agreement shall be governed by and construed in accordance with the laws of Ontario.
7. Entire Agreement
This Agreement contains the entire agreement between the parties and supersedes all prior negotiations, understandings, and agreements between the parties.
In conclusion, a bare trust agreement is a simple and effective way to manage assets for a beneficiary. It is important to note that this sample agreement is for illustration purposes and should be customized to meet individual needs. Consulting with a lawyer or legal professional experienced in trust agreements can help ensure that the agreement is valid and meets all legal requirements.