AI Family Trust Declaration (Canada)

Act as a senior Canadian trust and estate lawyer with 20+ years of experience in [PROVINCE] provincial law and federal tax regulations. Draft a comprehensive Declaration of Trust for a [TRUST_TYPE] to be known as the "[TRUST_NAME]".

**TRUST PARAMETERS:**
- Settlor: [SETTLOR_NAME]
- Initial Trustees: [TRUSTEE_NAMES] (specify if corporate or individual)
- Beneficiaries: [BENEFICIARIES] (include primary, contingent, and discretionary classes)
- Settled Property: [TRUST_ASSETS] (describe initial settlement and method of transfer)
- Trust Purpose: [TRUST_PURPOSE] (e.g., estate freeze, income splitting, asset protection, minor's property)
- Date of Settlement: [DATE_OF_SETTLEMENT]
- Special Conditions: [SPECIAL_CONDITIONS] (e.g., Henson provisions, specific distribution ages, exclusion of settlor)

**MANDATORY DRAFTING REQUIREMENTS:**

1. **RECITALS AND DEFINITIONS**: Establish parties, intent, and definitions per Canadian common law and [PROVINCE] civil code (if Quebec).

2. **SETTLEMENT OF TRUST PROPERTY**: Detail the initial transfer of [TRUST_ASSETS] and mechanism for future additions/settlements.

3. **TRUSTEE POWERS AND DUTIES**: 
   - Reference [PROVINCE] Trustee Act statutory powers
   - Add express powers for: investment (complying with provincial standards), income/capital distribution, borrowing, encumbering assets, and corporate participation
   - Include duty to file annual T3 Trust Returns with CRA

4. **BENEFICIAL INTERESTS**: 
   - [DISTRIBUTION_TERMS] (discretionary vs. mandatory)
   - Capital distribution timing and conditions
   - Income distribution rights (net income vs. taxable income allocations)

5. **TAX COMPLIANCE PROVISIONS**:
   - Address 21-year deemed disposition rule (Income Tax Act s. 104(4))
   - Include attribution rule protections (ITA s. 74.1-74.5) if applicable
   - Specify trust residence for tax purposes
   - Reference preferred beneficiary election if applicable

6. **EXCLUSION OF SETTLOR**: [SETTLOR_EXCLUSION_CLAUSE] (Yes/No - critical for estate freeze planning)

7. **ADMINISTRATIVE PROVISIONS**: 
   - Accounting and audit rights
   - Trustee remuneration and expenses
   - Removal and appointment of successor trustees
   - Amendment provisions (limited to maintain tax status)

8. **SPENDTHRIFT AND PROTECTION**: Standard restriction on assignment of beneficial interests and protection from creditors (where enforceable in [PROVINCE]).

9. **PERPETUITY AND DURATION**: Compliance with [PROVINCE] perpetuity rules and 21-year tax rule planning.

10. **GOVERNING LAW AND EXECUTION**: 
    - Specify [PROVINCE] law and federal Canadian law
    - Include execution clause with witness requirements specific to [PROVINCE] (e.g., two witnesses, notarization if required)
    - Add irrevocability statement if applicable

**DISCLAIMERS TO EMBED IN DOCUMENT:**
- This is a template requiring independent legal review
- Tax advice disclaimer (not legal tax advice)
- Trustee liability limitations per [PROVINCE] law

**OUTPUT FORMAT:**
Provide a formal legal document with:
- Roman numeral Articles and alphabetical subsections
- Proper legal terminology for Canadian jurisdiction
- Blank spaces for specific dates, dollar amounts, and final signatures
- A cover memorandum highlighting critical tax considerations specific to this trust structure