Investments | In-Trust Accounts

An in-trust account is an informal trust set up with LCU Financial to invest funds for a minor. With an in-trust account, someone manages money (or other assets) for a child until the child reaches the age of majority. At that point, the trustee can make the necessary arrangements to transfer control to the beneficiary. There may also be opportunities for tax advantage. If the in-trust account is properly structured, your child may pay the taxes on any capital gains. And because your child will probably have a lower taxable income than you, they will pay little, if any, tax.

In-Trust Accounts – The highlights

• You can contribute as much money as you want.
• You, the donor, are taxed on all income including interest, dividends. Foreign and other income if earned during a year in which you are a resident of Canada.
• If funds for an in-trust account come solely from Child Tax Benefit payments or an inheritance, income is taxed in the hands of the child (often at a lower rate if the child is in a lower income tax bracket).
• Capital gains may be taxed in the hands of the child.
• Money stays in the hands of the child to use as they wish if they decide not to pursue a post-secondary education.

Additional programs to encourage Canadians to save for their children’s post secondary education has been introduced; the Canada Education Savings Grant, the Canada Learning Bond and the Alberta Centennial Education Savings Plan. Ask your Certified Financial Planner for more information on how to take advantage of these great programs.