Many estate plans involve a “bare trust.” This document allows one person to hold the legal title of a property in trust for another person who is the true beneficial owner. The bare trust can be used to transfer ownership without triggering BC’s Property Transfer Tax, which only applies when there is a registered change of legal title.
The recent 2016 BC Budget describes government plans to require “…transferees acting as bare trustees to declare information in relation to settlors and beneficiaries of a trust.“ Depending upon how this requirement is implemented, it will not directly interfere with bare trusts. However, is it a signal of future plans to apply PTT to beneficial transfers?
Bare trusts will continue to be important, but particular care is required given this new disclosure requirement. And, if future tax changes are planned, hopefully the government will also consider long-standing requests to fix sections of the PTT that inappropriately interfere with estate planning (for example, by confirming that PTT should not apply when a person transfers a principle residence into his own name as trustee).