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Setting up in-trust accounts for children

Often, parents wish to gift money to children and have the money invested in a segregated fund. This will probably follow RESP investments.

Here's how to set up the segregated fund contract.

  • It will be an informal trust for the child.

  • The owner will be one parent in-trust for the child and this person will do all the document signing.

  • The child will be annuitant.

  • The beneficiary can be anyone or the estate of the child (but not the child).

  • At the age of majority, the child becomes the owner of the contract.

  • Which means the child has full control over the contract at that time.

  • One way to avoid this is to make one of the parents an irrevocable beneficiary.

  • Make the other parent the successor in-trust owner, so that in the event the first parent passes away, the contract will continue in-trust under the surviving parent's control.

  • Companies may require you to do a Third-Party identification form because the source of funds is from someone (the parent) other than the child. Just indicate it is a gift.

  • While in-trust, the parent will be responsible for any taxes owning.

We can help you confirm with each carrier about the completeness of the forms. They all seem to have their methods for setting up these types of contracts.

Scott Edgington, CEA

Regional Director, Business Development Wealth

Qualified Financial Services

This communication reflects the views of Qualified Financial Services Inc. as of the date published. The information in this publication is for general information purposes only and is not to be construed as providing individual legal, tax, financial or other professional advice. Qualified Financial Services Inc. assumes no responsibility for any errors or omissions in the information contained herein nor for any reliance placed on such information. Please seek independent professional advice before making any decisions.


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