Plan ahead with Sue Wyseman

Advice about In Trust accounts

Parents open In Trust accounts for their children for many reasons. Many open this type of account as a way of saving cash gifts that their child may receive, while some open these types of account to income split, and others use the account to deposit child tax benefits, as the interest or dividends are then claimed in the child’s name. Whatever the reason, be sure to keep in mind that although, as parents you may contribute the bulk of the money to the account, once the child reaches 18 the child is entitled to the funds held within the trust account, which should be turned over to them at that time.

Caution also needs to be exercised when making withdrawals from In Trust accounts as the CRA has the power to challenge the trust and, in some instances, dissolve the trust. Parents should not transfer money from an In Trust account to the child’s Registered Education Savings Plan as this transfers the ownership of the funds from the child to the parent and could jeopardize the trust.

If you have In Trust accounts for your children or would like to learn more about the benefits In Trust accounts can provide, talk to your Financial Advisor at The Credit Union today.