Alter Ego and Self-Benefit Trusts Annotated Alter Ego Trust Timothy Youdan

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1 Alter Ego and Self-Benefit Trusts Annotated Alter Ego Trust Timothy Youdan \\mtlapps02\marketing\systems\kv - Research, Interaction & Tikit\Article cover-

2 ANNOTATED ALTER EGO TRUST Timothy G. Youdan * Annotation: The terms "alter ego trust" and "joint spousal" or "common-law partner trusts" (which I shall refer to as a "joint partner trust") describe types of trusts that satisfy certain requirements of the Income Tax Act (Canada) (the "ITA") and which are defined in section 248 of the ITA. The requirements for an alter ego trust are: (a) the Settlor must have been at least 65 years of age at the time the trust was created; (b) the trust must have been created after 1999; (c) (d) (e) the Settlor must be entitled to receive all of the income of the trust that arises before his or her death; no person except the Settlor may, before the Settlor's death, receive or otherwise obtain the use of any of the income or capital of the trust; and the trust does not make an election referred to in ITA subparagraph 104(4)(a)(ii.1). The requirements for a joint partner trust are: (a) the Settlor must have been at least 65 years of age at the time the trust was created; (b) the trust must have been created after 1999; (c) (d) the Settlor and his or her spouse or partner, in combination with one another, are entitled to receive all of the income of the trust that arises prior to the death of the survivor of them; and no person, except the Settlor and his or her spouse or partner, may before the death of the survivor of them obtain the use of any of the income or capital of the trust. Ordinarily, a transfer of capital property to a trust will constitute a disposition that will trigger tax on any accrued gains. Where the transferee trust is an alter ego trust or joint partner trust the transfer will be on a rollover basis, thus deferring tax on any accrued gains if: * Partner, Davies Ward Phillips & Vineberg LLP

3 - 2 - (a) (b) the Settlor and the trust were each resident in Canada at the time of the transfer; and an election is not made to elect out of the rollover. (See ITA, subsection 73(1), subparagraphs 73(1.01)(c)(ii) and (iii) and paragraph 73(1.02)(c).) Generally, the "21 years rule" will not apply to alter ego trusts or joint partner trusts. Instead, there will be a deemed disposition of property of the trust on the death of the Settlor, in the case of an alter ego trust, or on the death of the survivor of the Settlor and his or her spouse or partner, in the case of a joint partner trust (ITA, paragraphs 104(4)(a)(ii.1)-(v)). Therefore, the gains or losses will arise in the trust and cannot be set against gains or losses of the Settlor. Moreover, since the trust will be an inter vivos trust, any gains will be subject to tax at the highest marginal rate. In the case of what would otherwise be an alter ego trust, the trust can make an election under paragraph 104(4)(a)(ii.1), in its income tax return for its first taxation year, not to have a deemed disposition on the death of the Settlor. If this election is made, the "21 years rule" will apply to the trust and also, pursuant to paragraph 73(1.02)(c), there will be no rollover with respect to the transfer of assets into the trust. The main reason for a person establishing an alter ego trust or a joint partner trust is minimization of the Estate Administration Tax. That tax is.5% on the first $50,000 and 1.5% of the balance of the value of a person's estate and is payable in respect of the issuance of a Certificate of Appointment of Estate Trustee (Estate Administration Tax Act, 1998, S.O. 1998, C.34). The alter ego trust and the joint partner trust facilitate the reduction in the value of the Settlor's estate by the placing of assets in the trust that would otherwise form part of the estate. These forms of trusts also provide convenient structures in place of, or in addition to, a continuing power of attorney for property, to deal with the administration of property in the event of the Settlor (or, in the case of a joint partner trust, the Settlor and his or her spouse or partner) becoming incompetent. One of the main disadvantages of both alter ego trusts and joint partner trusts is that, as they are inter vivos trusts, income of the trust that is taxed in the trust is taxed at the highest marginal rate. If the Settlor had not created the alter ego trust, but instead had established testamentary trusts by Will, those testamentary trusts could each have enjoyed the graduated tax rates applicable to a testamentary trust. It seems to be clear that this result cannot be achieved through alter ego or joint partner trusts. (See, e.g., CCRA Technical Interpretation (March 23, 2001.) Another disadvantage is that there may be difficulty in matching charitable credits with capital gains arising on the death of the taxpayer.

4 - 3 - ALTER EGO TRUST of, THIS DEED OF SETTLEMENT made in duplicate as of the day B E T W E E N: [PARTY NAME and description], (the Settlor " ") - and - [PARTY NAME and description, PARTY NAME and description, PARTY NAME and description], (the "Original Trustees") Annotation: Technically, it should be possible for the Settlor to be sole Trustee. However, this alter ego trust is designed to give the Settlor considerable control and flexibility regarding the trust during his or her lifetime. It is not necessary for the Settlor to be sole Trustee and, if he or she were sole Trustee, there would be an increased risk that the trust might be regarded as a sham. Often it will be convenient to have the Settlor as one of several Trustees (say three) with the other Trustees being the same persons as the executors of the Settlor's estate. Consequently, when the Settlor dies, or if he or she becomes mentally incompetent, those persons would continue as the Trustees. It will be necessary to transfer title to property intended to be comprised within the trust to the Trustees. Land Transfer Tax should not be payable on transfers of land. WHEREAS the Settlor wishes to create a trust for the benefit of and others on death, and has transferred to the Original Trustees the property set forth in Schedule A hereto (the "Settled Property") and may hereafter transfer or cause to be transferred to the Trustees other real or personal property, all of which is to be held by the Trustees upon the trusts and with and subject to the terms, powers and provisions, as hereinafter declared and contained; AND WHEREAS the Original Trustees have agreed to accept and to hold and deal with the Settled Property in accordance with such trusts, terms, powers and provisions; NOW THEREFORE THIS DEED WITNESSES THAT the Settlor and the Original Trustees hereby agree, acknowledge and declare that the Settled Property and all other properties that from time to time are included in the Trust Fund, as defined in this Deed, shall be held by the Trustees upon the following trusts:

5 INTERPRETATION (a) In this Deed: (i) "Accumulation Period" means the period of twenty-one (21) years from the death of the Settlor; (ii) (iii) (iv) (v) (vi) "Beneficiaries", at any time means the Settlor and such other persons who are then alive and who are beneficially interested in all or any part of the Trust Fund pursuant to the provisions of this Settlement or pursuant to the exercise of any power of appointment hereunder, and "Beneficiary" shall be construed accordingly; "child" and "children" and "issue" include adopted persons but do not include a person born outside marriage nor a person who comes within the description traced through another person who was born outside marriage, unless such person comes within the description by virtue of adoption; provided, however, that where the mother or father of a person has, in the unanimous opinion of the Trustees, demonstrated a settled intention to treat such person as his or her child, such person shall be deemed to be a child of such mother or father for the purposes of this Settlement; "Distribution Date" means that date which is 30 days after the date of death of the Settlor; "incapable of managing property" shall have the meaning provided by section 6 of the Substitute Decisions Act, Statutes of Ontario 1992, chapter 30, as amended at the date hereof; "person" includes a corporation, trust or partnership as well as an individual; (vii) "Perpetuity Date" means the day that is the twentieth (20 th ) anniversary of the death of the last to survive of the Settlor and all of the issue of the Settlor alive on the date hereof; (viii) (ix) "Personal Effects" means articles of personal, domestic or household use or ornament including, without limiting the generality of the foregoing, all household goods, furniture, furnishings, books (except books of account), artwork, pictures, silver, plate, plated goods, linen, glass, china, manuscripts, musical instruments, wearing apparel, jewellery, boats and automobiles; "Trustees" initially means the Original Trustees and at any other time means the person or persons holding office as trustee or trustees of this Settlement at such time; and

6 - 5 - (x) "Trust Fund" means the Settled Property and any other property, including any investments made by the Trustees, that may be held at any time by the Trustees pursuant to this Deed and any undistributed income from such property. (b) Words and expressions in any particular gender shall include the other genders as the context may permit and the singular shall include the plural and vice versa. 2. DISTRIBUTIONS OF INCOME AND CAPITAL Payments of Capital and Income to the Settlor (a) During the lifetime of the Settlor, the Trustees shall pay to or for the benefit of the Settlor all of the net income of the Trust Fund and shall pay or apply the whole or such part or parts of the capital of the Trust Fund as the Settlor shall from time to time in writing request, or as the Trustees shall from time to time in their unfettered discretion determine, to or for the benefit of the Settlor at such time or times and in such manner and in such amounts as the Settlor shall in such writing request or the Trustees shall in their unfettered discretion from time to time determine necessary or advisable for any reason whatsoever. Annotation: Typically, when an alter ego trust is created, the Settlor will wish to retain considerable control, including the power to determine the beneficiaries after his or her death, and will wish to be able to withdraw capital from the trust during his or her lifetime. The trust will, therefore, be within section 75(2) of the ITA so that during the Settlor's lifetime and while he or she is resident in Canada the income, losses, capital gains and capital losses from property in the trust will be deemed to be the Settlor's. Paragraph 2(a) gives the Settlor the right to receive all of the income and he or she can also request the payment of capital. Since the trust may apply at a time when the Settlor has lost mental competence, it is important that the Trustees also have discretion to pay or apply capital for the benefit of the Settlor even in the absence of a request from the Settlor. Paragraph 2(b) deals with use of residential property and personal effects by the Settlor. Annotation: In the case of trusts other than alter ego trusts and joint partner trusts there is a possibility that the holding by a person of significant powers over the trust property, such as a power to revoke the trust or to withdraw capital, might give rise to a deemed disposition of the capital interest of such person on his or her death. Since such person's death does not increase the adjusted cost base of the property in the trust, there is a possibility of double taxation. (See Goodman on Estate Planning (2002), Vol. X, No. 4 at 834.) However, there is not such a possibility of double taxation in the case of alter ego trusts and joint partner trusts since the definition of "cost amount" of a capital interest in a trust (ITA, paragraph 108(1)(a.1) has the effect that the cost amount of the capital interest of the Settlor (or of the survivor of the Settlor and his or here spouse or partner in the case of a joint partner trust) is

7 - 6 - adjusted to take into account the deemed disposition of the property of the trust under subsection 104(4). Use of Residential Property and Personal Effects: (b) DURING the lifetime of the Settlor, the Trustees shall permit the Settlor to use and occupy any residential property comprised in the Trust Fund and to use any Personal Effects comprised in the Trust Fund as the Settlor shall from time to time in writing request or as the Trustees shall from time to time in their unfettered discretion determine. Annotation: ITA section 40(4) allows the holding of the Settlor and the trust to be combined for the purpose of the principal residence exemption and the trust is entitled to claim the principal residence for any taxation year in which the property was the Settlor's principal residence. Payment of Debts, Funeral Expenses and other Testamentary Expenses of Settlor (c) Upon the death of the Settlor, to the extent that the estate of the Settlor may not be available, whether by reason of insufficiency of assets or otherwise, to make the payments referred to in this paragraph 2(c), the Trustees shall pay out of the capital of the Trust Fund such amounts as are necessary to satisfy any shortfall in respect of the just debts, funeral expenses and testamentary expenses of the Settlor including, for greater certainty, the taxes payable by the Settlor or the Settlor's estate (whether imposed by or pursuant to the law of any domestic or foreign jurisdiction) and estate, legacy, succession and inheritance taxes or duties (whether imposed by or pursuant to the laws of any domestic or foreign jurisdiction) that may be payable in connection with property passing or deemed to pass by any governing law on the death of the Settlor, or in connection with any insurance on the life of the Settlor, or in connection with any gift or benefit given or provided by the Settlor either in the Settlor's lifetime or by survivorship or by the Settlor's Will or any Codicil to it, and whether such taxes and duties are payable in respect of estates or interests which fall into possession at the Settlor's death or at any subsequent time; and the Trustees are authorized to commute or prepay any such taxes or duties. Division Among Beneficiaries on Death of Settlor (d) Upon the death of the Settlor: (i) to pay the following amounts to such of the following persons who are alive on the Distribution Date for their own use absolutely: (A) five hundred thousand dollars ($500,000) to ; [Continue with money payments]; provided, for greater certainty, that no interest or other income shall be payable in respect of such amounts unless and to the extent that any amount is not paid within one year from the date of the

8 - 7 - Settlor's death and simple interest at the rate of five per cent (5%) per annum shall be paid on any unpaid amounts from the end of such year until the date of payment; (ii) to divide the balance of the Trust Fund after giving effect to the foregoing provisions of this paragraph 2(d) into as many shares as there shall be children of the Settlor alive on the Distribution Date, provided that if any of the Settlor's children shall then be dead and if issue of such deceased child of the Settlor shall then be living such deceased child of the Settlor shall be considered alive for the purpose of such division, to be dealt with as follows: (A) (B) to pay and transfer one (1) such share to each child of the Settlor then alive for his own use absolutely; and to divide and allocate each share set aside in respect of a child of the Settlor who shall not have been alive on the Distribution Date leaving issue then alive in equal shares per stirpes among such issue of each such deceased child of the Settlor and each such share shall be held by the Trustees as a separate trust and shall be dealt with in accordance with the terms and conditions set out in paragraph 3 hereof. 3. ISSUE TRUSTS (a) FOR the purposes of this paragraph 3, each share of the Trust Fund allocated to one of the issue of the Settlor pursuant to paragraph 2(d)(ii)(B) of this Deed is hereinafter referred to as a "Share" and the individual to whom each Share has been so allocated is hereinafter referred to as the "Beneficiary"; and (b) THE Trustees shall hold each Share in trust: (i) to pay and transfer to the Beneficiary the balance of the capital of the Share remaining when he or she attains the age of thirty (30) years for his or her own use absolutely and meanwhile to stand possessed of the capital and income of the Share and to pay or apply the whole or such part or parts of the capital and income thereof as the Trustees shall from time to time in their unfettered discretion determine to or for the benefit of the Beneficiary at such time or times and in such manner and in such amounts as the Trustees shall in their unfettered discretion from time to time determine necessary or advisable for any reason whatsoever and, until the Accumulation Date, to accumulate and add to the capital of the Share for all purposes of this Deed any income not so paid or applied in any year and to pay all such income arising after the Accumulation Date to or for the benefit of the Beneficiary for his or her own use absolutely;

9 - 8 - (ii) if at any time the Beneficiary shall die under the age of thirty (30) years before the whole of the capital of the Share shall have been fully distributed, to divide and allocate the Share, or the part thereof then remaining, among the issue of the Beneficiary, if any, then alive or, failing such issue, among the issue of the parent of the Beneficiary who is one of the Settlor's children, if any, then alive, or failing such issue, among the issue of the Settlor then alive, in each case in equal portions per stirpes and to deal with each such portion in accordance with the provisions of clause 3(b)(i) of this Deed as if references therein to the "Beneficiary" referred to such of the issue of the deceased Beneficiary, issue of the parent of the deceased Beneficiary who is one of the Settlor's children, or such of the issue of the Settlor, as the case may be, to whom such portion shall have been so allocated and as if references in clause 3(b)(i) to a "Share" referred to such portion; (iii) the provisions of clause 3(b)(ii) of this Deed shall apply mutatis mutandis on the death before attaining the age of thirty (30) years of any of the issue of the Settlor to whom a Share or portion of the Trust Fund has been allocated pursuant to clause 3(b)(i) or clause 3(b)(ii) of this Deed; and 4. MINORS (iv) notwithstanding any of the foregoing provisions of subparagraph 3(b) of this Deed, in the event that, on the Perpetuity Date, any Share or portion shall be held by the Trustees in trust to apply the capital and income thereof in accordance with any of the foregoing provisions of this said subparagraph 3(b) for the benefit of any individual who shall not then have attained the age of thirty (30) years, the beneficial interest of such individual in the capital and income of such Share or portion shall thereupon vest absolutely in possession in such individual for his or her own use absolutely as if such individual had on the Perpetuity Date attained the age of thirty (30) years. THE Trustees may make any distributions of income or capital pursuant to this Deed to any Beneficiary who is under the legal age of majority by distributing the same to a parent or legal or de facto guardian of such Beneficiary. A receipt given to the Trustees by any such parent or guardian shall be a full discharge of the Trustees with respect to a distribution made to such person. Alternatively, notwithstanding any other provision of this Deed, the Trustees may retain and invest the amount or the property otherwise distributable to such Beneficiary until he or she attains the legal age of majority. The Trustees shall have full power and discretion to pay, transfer or apply all or any part of any such amount or property retained by them, or of the income therefrom, to or for the support or benefit of such Beneficiary at any time or times until he or she attains the legal age of majority when such amount or property or the part remaining, if any, shall be paid or transferred to such Beneficiary.

10 POWERS OF TRUSTEES IN addition to all other powers and discretions conferred upon the Trustees by law or under this Deed, the Trustees shall have the following powers, provided that the Trustees shall not exercise any power in a way which shall result in anyone except the Settlor being entitled to receive any of the income of the Trust Fund that arises before the Settlor's death or anyone except the Settlor being entitled, before the Settlor's death, to receive or otherwise obtain the use of any of the income or capital of the Trust Fund: Investments (a) To invest and reinvest any money forming part of the Trust Fund in any property of any kind whatever without being limited to investments authorized by law for Trustees and without any obligation to diversify; Acquisition of Other Property (b) To purchase or otherwise acquire and hold as part of the Trust Fund any real or personal property whether such property is or is not capable of producing income including, without limiting the generality of the foregoing, any residential or recreational property; Disposition of Trust Property (c) To sell, assign, exchange, lease, grant any option or otherwise dispose of the whole or any part of the Trust Fund in any manner for such consideration and on such terms and conditions as the Trustees may deem advisable or expedient and any such lease may, notwithstanding any conflict of interest and duty created thereby, be granted to any of the Trustees whether alone or along with one or more others; Borrowing (d) To borrow funds from any bank, trust company or other financial institution, person or source on such terms and conditions as the Trustees may deem advisable or expedient; Pledge (e) To pledge, charge, mortgage or give any other form of security on all or any part of the Trust Fund and to renew any such security on such terms and conditions as the Trustees may deem advisable or expedient;

11 Insurance (f) To purchase or otherwise acquire any policy of insurance on the life of any person, to pay any premiums falling due under such policy and to deal with such policy and any proceeds thereof as part of the Trust Fund in such manner as the Trustees may deem advisable or expedient; Rights Incidental to Ownership (g) To exercise any voting rights and other rights incidental to the ownership of any investments or other property included in the Trust Fund, to grant proxies and to participate in any plan or arrangement for the dissolution, merger or reorganization of any corporation or partnership whose shares, bonds, interests or securities are included in the Trust Fund and generally to do any act with respect to the investments or other property included in the Trust Fund that would be within their powers if they were the absolute owners of such investments or other property included in the Trust Fund; Agreements (h) To enter into any agreement or other transaction with respect to any investments or other property included in the Trust Fund upon such terms and conditions as the Trustees may deem advisable or expedient; Settlement of Claims (i) To settle, waive, release or compromise any claim or obligation of, or owing to them, in their capacities as Trustees; Limited Liability (j) To exclude their personal liability in any agreement or other transaction entered into by them in the course of their management of the Trust Fund or the administration of the trusts under this Deed; Professional Advice (k) To act on information or advice obtained from any lawyer, accountant, valuer, broker, firm of investment dealers or any members thereof or any other adviser or expert and to pay for such information or advice out of the Trust Fund or out of the income therefrom as the Trustees may deem appropriate, and to employ and remunerate any investment counsel or other investment advisors to assist the Trustees in investing the Trust Fund on such terms and with such delegated powers as they may consider advisable including, for greater certainty, delegated power to choose, acquire and dispose of investments from time to time and including the power to sub-delegate the power to choose, acquire and dispose of investments and the Trustees shall not be liable for any losses incurred as

12 a consequence of the exercise, or failure to exercise, any such delegated powers by any such investment counsel or investment advisor; Annotation: The reference to sub-delegation is included since subsection 27.2(2) of the Trustee Act, R.S.O. 1990, c. T.23 (as amended) provides that an, "agent who is authorized to exercise a trustee's functions relating to investment of trust property shall not delegate that authority to another person." However, this provision like other provisions of the Trustee Act can be overridden by the terms of the trust instrument (Trustee Act, subsection 27.1(9) and sections 67 and 68). Cash Deposits (l) To deposit any money included in the Trust Fund with any investment dealer, stockbroker, chartered bank, duly registered trust company or financial institution in any jurisdiction; Incorporation (m) To incorporate, or join with any other person or persons in the incorporation of, any corporation and to sell or exchange any property included in the Trust Fund to any such corporation for securities of such corporation or for such other consideration as the Trustees shall deem advisable or expedient; Distribution in Specie (n) To distribute any part of the Trust Fund in cash or in specie and for such purpose to determine conclusively the value of any property included in the Trust Fund; Signing Authority (o) To appoint any one or more of the Trustees or any other person or persons to sign all or any banking documents, stock transfers, receipts, promissory notes, other negotiable instruments and any other documents of any kind required to be signed on behalf of the Trustees at any time; Documents of Title (p) To hold securities in bearer form or duly endorsed for transfer in blank or to record or register the ownership of any securities or other investments or property included in the Trust Fund in the name of the Trustees or of any agent or nominee of the Trustees and to grant custody of any such securities, investments or property, or the documents of title relating thereto, to any agent or nominee of the Trustees;

13 Taxation (q) To perform, or to refrain from performing, all of their obligations and to exercise all of their powers under the taxation laws of any jurisdiction to the extent that they may deem advisable or expedient; and Agents (r) To appoint any person or persons to act as their agent or agents for purposes of this Settlement and to delegate in writing to such agent all or any of the powers conferred upon the Trustees under this paragraph REPLACEMENT OF TRUSTEES WHILE not incapable of managing property, the Settlor shall have power to appoint one or more additional, substitutional or alternate Trustees and such power may be exercised by instrument in writing including the Settlor's Will or other testamentary instrument and, subject to any such appointment made by the Settlor, and if the Settlor shall not be alive or shall be incapable of managing property, the Trustees for the time being shall have power exercisable by instrument in writing to appoint one or more additional or substitutional Trustees. 7. RESIGNATION OF TRUSTEES ANY Trustee may at any time resign by giving sixty (60) days' notice to the Settlor or if the Settlor shall not be alive or shall be incapable of managing property, to the continuing Trustee or Trustees, if any, or if the Settlor shall not be alive or shall be incapable of managing property and there shall be no continuing Trustee, upon the appointment of, and acceptance by, a substitutional Trustee. 8. REMOVAL OF TRUSTEES WHILE not incapable of managing property, the Settlor shall have the power and authority, at any time and from time to time by notice in writing delivered to the Trustees or by Will or other testamentary instrument to remove any Trustee, whether original or substitutional, effective as of such time as is set out in such notice or testamentary instrument. 9. TERMINATION OF OFFICE ANY Trustee who becomes incapable of managing property shall thereupon cease to be a Trustee hereunder. 10. MAJORITY DECISIONS AT any time when there are more than two (2) Trustees, any decisions of the Trustees in connection with the performance of their powers and obligations under this Deed may be made by a majority of the Trustees, provided however that at all times when the Settlor is not incapable of managing property, any such majority shall include

14 the Settlor. No absent, abstaining or dissenting Trustee shall incur any liability arising out of such decisions or for failing to apply for the advice and direction of a court with respect thereto. Annotation: As already indicated, the trust is designed so that the Settlor, while mentally competent, will have substantial control and flexibility without jeopardizing the arrangement as a valid trust. Paragraphs 6, 7 and 8 enable the Settlor, while mentally competent, to appoint and remove Trustees. Therefore, although decisions may, pursuant to paragraph 10, be made by majority decision, the Settlor has the power to determine who the Trustees will be. This power, in combination with the power to request capital payments (paragraph 2(a)), and the power to amend the trust (paragraph 14), has the effect that the Settlor's ability to control and enjoy the trust assets during his or her lifetime and while mentally competent is, as a practical matter, substantially retained. 11. DISCRETION AND LIABILITY OF TRUSTEES ALL powers conferred upon the Trustees or upon their agents pursuant to this Deed shall be exercisable in the unfettered discretion of the Trustees or such agents, as the case may be. None of the Settlor or the issue of the Settlor, acting as Trustee (the "Family Trustees"), or their agent shall be liable for any act or omission in the purported exercise of any such power or in the performance of his or her obligations pursuant to this Deed or for any loss or diminution in value suffered by the Trust Fund unless such act, omission, loss or diminution in value constitutes, or is caused by, the fraud or wilful default of the Family Trustees or agent as the case may be. Each Trustee, other than a Family Trustee, or their agent shall not be liable for any act or omission in the purported exercise of any power conferred upon such Trustee or upon their agents pursuant to this Deed or in the performance of its obligations pursuant to this Deed or for any loss or diminution in value suffered by the Trust Fund unless such act, omission, loss or diminution in value constitutes, or is caused by, the fraud, wilful default or negligence of the Trustees or agent, as the case may be. 12. ACCOUNTING BY TRUSTEES THE Trustees may keep the accounts of this Settlement in any form and shall not be obliged to maintain accounts in the form otherwise required under the laws of Ontario or of any other jurisdiction. Annotation: Although the obligation of trustees to account for their administration of the trust cannot be wholly abrogated, it should be held that the trust instrument can modify the form in which that accounting is required. 13. EXPENSES AND REMUNERATION OF TRUSTEES THE Trustees shall be fully indemnified out of the Settlement for all expenses and liabilities incurred by them in the performance of their responsibilities as Trustees under this Deed and the Trustees shall be entitled to receive such remuneration at such time or times out of the capital or the income of the Trust Fund as a court of

15 competent jurisdiction may consider fair and reasonable remuneration for their services as Trustees under this Deed. 14. AMENDMENT By deed delivered to all of the Trustees, the Settlor may, while not incapable of managing property, at any time alter, add to, or rescind any or all of the provisions of this Deed, whether original or amended, provided that no such amendment shall result in anyone except the Settlor being entitled to receive any of the income of the Trust Fund that arises before the Settlor's death or anyone except the Settlor being entitled, before the Settlor's death, to receive or otherwise obtain the use of any of the income or capital of the Trust Fund. 15. FAMILY LAW No Community of Property (a) If and to the extent permitted by applicable law, no benefit under this Settlement shall be assigned or anticipated or fall into any community of property or partnership which may exist between any Beneficiary and his or her spouse and every such benefit shall remain the separate property of the Beneficiary free from all rights or controls by his or her spouse. Ontario Family Law Act (b) All property acquired by any Beneficiary under this Settlement including any income or capital of the Trust Fund distributed to such Beneficiary together with any property into which such property can be traced, and all income from such property or properties into which such property can be traced, including income on such income, shall be excluded from such Beneficiary's net family property for the purposes of the Family Law Act, Revised Statutes of Ontario 1990, chapter F.3, as amended from time to time, and any successor legislation or any similar legislation of any other jurisdiction and, if and to the extent permitted by applicable jurisdiction, will not be subject to claims of ownership or division by such Beneficiary's spouse for the purposes of or pursuant to any family law legislation of any applicable jurisdiction. 16. DESIGNATION OF TRUST THE provisions of this Deed and the trusts created hereunder are designated the ALTER EGO TRUST and the Trustees and their agents or nominees may in that name hold title to any investments or other property included in the Trust Fund, carry out any transactions for the purposes of this Settlement and enter into any contracts or arrangements or otherwise exercise any of the powers, discretions or authorities conferred upon them in this Deed.

16 GOVERNING LAW THE validity and effect of this Settlement and the construction of the provisions of this Deed shall be governed in all respects by the laws of the Province of Ontario. IN WITNESS WHEREOF the parties have executed this Deed as of the day and year first written above in the presence of the undersigned witnesses. SIGNED, SEALED & DELIVERED In the presence of: Witness (AS SETTLOR AND TRUSTEE) (seal) Witness Witness (AS TRUSTEE) (seal) Witness (AS TRUSTEE) (seal)