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Divorce & Family Law This forum is for discussing any of the legal issues involved in your divorce.

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Old 05-18-2015, 06:25 PM
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Default Trust Fund

Hi,
My father left my children a Trust fund when he passed away in 2009. I am the bare trustee for the children. I am not a beneficiary, only the children.

My ex wants the trust fund to pay for section 7 expenses. The trust does make income on investments and pays taxes on said income. (except the ex is now keeping the income, but that's another thread)

The trust fund is for the purpose of education and I'm fine taking over the RESPs from the ex and having the trust pay for those. I'm thinking he's going to go for a situation such as: he pays a portion, I pay a portion, the Trust pays a portion OR the trust takes over paying for Section 7 - the ski racing the ex wants to continue the boys in will decimate that trust in a couple of years time.
Would my ex have a claim for getting the Trust to pay Section 7? Has anyone heard of a case law involving children's Trust funds?
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Old 05-18-2015, 07:16 PM
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Based on all your issues you've posted, you might be better to speak to a lawyer. From what you have said, your ex is trying to get away with stealing from his kids and not paying anything. Trust funds and dividends shouldnt be used to cover the child support and expenses he is obligated by law to pay. If you dont have an order for all of this stuff: cs, s7 %, financial disclosure, dividend payments for childrens trusts and business shares etc then you need to get one written up that can be enforced. It may cost you some money to do so but in the long run, it may help. Your case is way too complicated for a bunch of people on a forum.
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Old 05-18-2015, 07:26 PM
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The ex wants the trust to pay his share of S7? That sounds wrong to me - S7 is his parental responsibility, not his kids'. If he can't afford an optional S7 expense (like ski racing), he has the option of saying so and not paying for it (and the kids will survive perfectly well without it). Raiding the kids' education money to pay for sports should not be one of the options.

If the terms of the trust specifically say "education", that's what it should be for - neither parent should be using either the capital or the income for anything else. I would treat it like an RESP, which is locked for anything other than postsecondary expenses. You are the trustee for a reason, so hold firm. Even if your ex drags this into court, I can't see any judge would agree that skiing is more important than school.

When the time for postsecondary comes, I imagine the trust could be treated as the children's portion of the financial responsibility, with you and Dad also paying your share. The usual formula seems to be kid pays 1/3 and Mom and Dad split the other 2/3 proportionate to income, but I don't think this is written in stone anywhere.
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Old 05-18-2015, 07:29 PM
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(Just read your other postings - I agree with rockscan, you really need a lawyer to keep on top of this stuff).
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Old 05-19-2015, 08:59 AM
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I do get Info from a lawyer, but I have not retained one. I think my ex would be thrilled for me to go the lawyer route so he could break me financially. My last lawyer took half my money and I received nothing of value. Back then things were a lot more emotional for me and I'd never dealt with a lawyer before, so I was prime pickings for a lawyer. Needless to say, the bills gave me PTSD and I cannot go that route again.
We are to enter binding arbitration- we each need to come up with our half of the retainer today or she's withdrawing as arbitrator, in which case I will have to take ex to court to force the issue - judge already said get arbitrator and if you don't, come back and I will assign one. Of course ex was all for arbitration and now true to form, changed his mind.
I'm just trying to get info for before I go into arbitration.
I think I will offer for the trust to take over the resps (my ex took them over at separation), as long as these 'guarantee fees' go to the garbage. That way the funds stay true to form and he will be getting financial relief, could work. He's not the most easy negotiable guy- he actually wanted to be named trustee in my place.
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Old 05-19-2015, 09:23 AM
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If you need to see a lawyer, take a friend or someone you trust with you who can take notes or keep you calm. My partner saw a lawyer alone and got so emotional that he forgot questions and didnt remember what he said. I go with him now to take notes and ask questions he needs answers to and get info on long term stuff. He still gets emotional and his lawyer is very good at staying on point with him but it helps to have the notes after.

You need to remember one thing: regardless of what investments there are or what accounts were set up, your ex is still responsible for child support and section 7 including post secondary. Theres a really good case called Lewi v. Lewi which outlines post secondary and the childs contributions. The father wanted trust funds set up by the maternal grandfather to be used for education costs. The judge didnt agree and the father was still obligated to contribute.

You should also speak to a corporate lawyer or someone similar about the kids' shares in the company (I think that was your other issue?) and see about having their shares bought out or removed. You need a clean financial break from all this mixed up stuff so he has no way of saying "this is my contribution" or "im keeping this money safe for the kids".

If arbitration doesnt work, you would be better served having legal advice for the rest of it. Especially since your ex seems to think he can steal from you.
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Old 05-19-2015, 10:41 AM
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A trust is a quasi-legal entity that exists solely for the purposes set out in the trust agreement. Your role is not the bare-trustee, you are simply the trustee. Your role as trustee is the distribute the funds in such manner as the trust agreement provides.

If I am piecing this together right:

1. Your ex incorporated a few corporations to purchase real estate. Your ex acts as director, officer and sole shareholder (as bare trustee for the trust).
2. The corporation he incorporated is a partner in a joint venture with other corporations/individuals.
3. The joint venture distributes profits to the corporation in its proportional share.
4. The corporation would in turn would dividend it up to the shareholder (your ex as bare trustee for the Trust).

So to kill two birds with one post, the dividend issue shouldn't be difficult. If the JV is distributing profits to the corporation, those monies should still be sitting in the corporations accounts. If the articles of incorporation provide that the payment of dividends is discretionary, than the director of the corporation doesn't have to declare a dividend. They get to choose whether or not a dividend is paid. There is no issue with this, the monies simply remain in the corporations account.

But, if the trust is unhappy with how the ex is managing the corporation, it could rescind the appointment of your ex as bare trustee and appoint another person to act in that capacity. Then the new (bare trustee) shareholder would remove the director and change the officers. I'd speak to a corporate lawyer on this matter.

As for the trust and how the funds are administered, the trustee is bound to distribute the funds in the manner set out in the trust settlement. If it says the funds may be used for the kids extra-curricular activities, than it may be used for such. If it says it may be used in such manner as the trustee, in their discretion, determines...well, the trustee can use the funds for the benefit of the beneficiaries as they deem fit. But if it says the funds are to be used for the kids education, than the trustee's hands are tied as the funds purpose is restricted.

I would suggest getting a good corporate/estates lawyer. It will likely save you from having to argue the matter in court.
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