GLOSSARY

Canadian Financial, Real Estate and Mortgage Glossary

How often this word is used
 
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50% - Moderately

Informal Trust


Synonyms:bare trust, in-trust account, informal in-trust account
Filed Under: financial-banking, investments
Tags: banking, investment
 

Definition of informal trust

informal trust
1. An investment account registered in the name of an adult, but is in trust for a child. The trust is used to save or invest funds for a child who can access and use the funds when he or she reaches the legal age. Also known as in-trust account or "bare" trust.

Related Terms and Acronyms:

  • death benefit (DB)   A payment or series of payments made to the beneficiaries of a life insurance policy.
      ➥  An amount paid to a beneficiary in a life linsurance policy.
  • estate planning   The process of determining how assets will be dispersed after an individual's death, ideally in the most tax-efficient way possible.
  • fiduciary   An individual, company, or association that manages assets for another party. Fiduciaries include executors of wills and estates, trustees, receivers in bankruptcy, and those responsible for managing the finances of a minor.
  • life insurance trust (LIT)   A legal entity that is made the beneficiary of a life insurance policy, often arranged to evade taxation.
  • Registered Education Savings Plan (RESP)   An investment vehicle used for a child's post-secondary education.
      ➥  RESPs are offered by most financial institutions in Canada.
  • survivorship   The right of a person to secure ownership by reason of his/her outliving someone with whom s/he shared undivided interest in the land.
  • trust   A fund established like a will, specifying how money or property will be disbursed, lists the recipients or beneficiaries and names one or more trustees to manage the assets. An irrevocable trust can't be changed after the terms are finalized; a revocable trust has more legroom in how much can be transferred, but is usually costlier to maintain.
  • trust account   An account used by a law firm or real estate agent to handle earnest money, funds set aside for repairs and other money that the buyer and seller put up before closing.
  • trust company   A company that acts as a trustee (an entity that controls financial assets on the behalf of another).
  • trustee   A person who holds and manages assets for the benefit of beneficiaries.

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