Funds Held In Trust

2010-02-23   minute read

Hello, Section 67(1)(a) of the Bankruptcy & Insolvency Act states that property of a bankrupt divisble among his/her creditors shall not comprise property held by the bankrupt for any other person. In summary, property held in trust for another person does not constitute an asset(s) of the bankruptcy estate. That being said, in order for property to be held in trust it must meet certain criteria - i.e. certainty of intent, certainty of object and certainty of subject matter. For example, if there is money held in trust for your children, it should be deposited in an account that is clearly marked as being held in trust (e.g. Mother Smith in trust for Daughter Smith). If the funds are co-mingled, they are not being held in trust. For example, a joint bank account in the name of Mother Smith and Daughter Smith. Funds held in trust should be clearly identified as such. RESPs are not considered funds held in trust and can be liquidated in bankruptcy. It should also be noted that S. 23(1) of the Manitoba Executions Act sets out an exemption for cash on hand - "the food and fuel necessary for the judgment debtor and the members of his family for a period of six months, or the cash equivalent thereof..." This legislation is not referring to fuel for your vehicle but rather heating fuel for the home. Nevertheless, you may also be entitled to a small exemption for cash on hand. Brad Milne, CIRP Trustee in Bankruptcy Brandon, Manitoba

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