Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
Availability of preferred beneficiary election. Dispute between father and minor children.
Position:
Election is not available.
Reasons:
Both parents are the legal guardians of their children's property and both must consent to the election.
October 31, 1997
Regina Tax Services Office Trusts Section
Client Assistance Division T. Murphy
Estates & Trusts (613) 957-8283
Attention: Gord Rubin
972670
Preferred Beneficiary Elections
This is in reply to your letter of October 1, 1997, concerning the above-noted topic. Our understanding of the facts and issue is as follows.
Facts:
XXXXXXXXXX
Issue
6.You have asked whether the preferred beneficiary elections are valid; i.e., does XXXXXXXXXX have the authority to sign the elections on behalf of XXXXXXXXXX. You have also asked whether the letters sent by XXXXXXXXXX could be considered a renunciation of their rights to income and capital of the trust.
7.Subsection 30(1) of The Children's Law Act of Saskatchewan (copy attached) provides:
Unless otherwise ordered by the court and subject to the provisions of this Act, the parents of a child are the joint guardians of the property of the child with equal rights, powers and duties.
8.While there are provisions in that act dealing with custody situations, they are not relevant as the court order referred to above did not make an order regarding custody of the children.
9.XXXXXXXXXX, therefore, are the joint guardians of the property of their children.
10.In our opinion, XXXXXXXXXX is not entitled to act alone in signing the preferred beneficiary elections on behalf of XXXXXXXXXX and the elections are invalid. We recommend that you ask XXXXXXXXXX to provide support for his view that he is entitled to act without XXXXXXXXXX consent. We would be pleased to review any submission he makes on this point.
11.We do not believe it is appropriate to treat the letters from XXXXXXXXXX as renunciations. In our opinion, both XXXXXXXXXX would have to agree to such an action as they are joint guardians of the property of their children. As well, if the confusion concerning the preferred beneficiary elections is resolved satisfactorily, such action would be unnecessary to prevent income accumulated in the trust from being taxed in the children's hands. In this case the preferred beneficiary election would not be available after 1995.
Please call if you have any questions concerning this memorandum.
R.S. Biscaro
Director
Resources, Partnerships
and Trusts Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
Attachment
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