1. Can the trust ever be terminated?

Provincial law requires trusts have a termination date.  The Clench Fraud Trust will terminate 20 years after the death of the last surviving member of the members listed on band list at the time of the creation of the trust.

2. What laws govern the Clench Fraud Trust?

The Clench Fraud Trust Agreement governs the trust which was ratified by the nation’s members at a referendum.  The province of Ontario have jurisdiction over statute laws which govern trusts as well. The income tax laws will also apply.

3. Can the money be put into a savings account?

The Investment Policy Statement provides the investment managers the guidelines and restrictions on how the money must be spent.

4. What is the Investment Policy Statement?

The Investment Policy Statement is a document approved by the trustees that outlines to the investment manager how the money is to be invested.

5. Who ensures that the trust laws are followed?

The trustees must ensure the trust laws are followed.

6. What if the investors make a mistake?

Any investments in stocks and bonds require taking risks.  The Investment Policy Statement gives the ranges in which the investment manager can trade on the stock market in Canadian, U.S., and international markets.  If they go outside these parameters The Clench Fraud Trustees can take action against Ridgewood Capital Asset Management for breaching the Investment Policy Statement.

7. Can any of these investments be made inside the First Nation?

There is a strict criteria that must be followed by the investment managers in the Investment Policy Statement that requires them to only purchase investments that are traded in stock exchange markets and have a particular rating.  If there are Aboriginal-owned companies from the First Nation that meet the criteria the investment manager may purchase their stocks.

8. Can the trust money be used to invest or loan money to the band when there is a ministerial guarantee?

Investments of capital cannot be used to loan money to the First Nation.  Income generated can be dispersed as a loan to the First Nation and charged an interest rate for borrowing.  Promissory notes given to the First Nation are not considered loans and normally would not be charged an interest rate.

9. What is capital?

The capital is the original investment of cash that created the fund.

10. Do we pay taxes on the Clench Fraud Trust money?

Yes, a trust is considered a tax payer.  The trustees are required to fill out a T3 (Trust Information Return) each year.  All investment income that flows into the trust is taxable, i.e., interest, dividends, income from mutual funds, taxable capital gains (losses), etc.

11. Are there special write-offs that trusts can take advantage of in order to lessen the amount of taxes it earns?

All the reasonable costs of running a trust are deducted from gross income.  The rest of the income can be allocated or dispersed either through support of programs that benefit the beneficiaries or through a promissory note to the nation.  Whatever is not allocated will be taxed.

12. What is a promissory note?

It is money that is given to another party in exchange for paper stating the money will be returned at a certain time.

13. Can the trust agreement be changed?

Yes, there is an amendment procedure that is outlined in the trust agreement.

14. Can the trust use the income earned to reinvest as capital?

Yes, in an agreement with the First Nation through a promissory note the trust and the nation can decide to reinvest the income by making a capital contribution to the capital.

15. At what tax rate is the trust income taxed?

Section 75-2 of the Income Tax Law (provincial laws) sets the tax rates for trusts.  Second generation income (income on income) is taxed at the maximum rate.

16. How do the investment manager’s fees get paid?

The trust is sent an invoice.

17. Who advises the trust?

Rodgers Consulting provides advice on trust matters and serves as the watchdog on the work of the investment managers.

Investing

18. With bonds, when is income realized?

Every six months, interest earned is paid.  This income would then have to be claimed as income earned for tax purposes.

19. What does a split mean?

It is when a company offers more shares for every one share owned by a stockholder.

20. Are there laws that govern only First Nation trusts?

No, First Nation trusts are grouped in a category of trusts called testamentary trusts which are the same as trusts created in personal wills to children.

21. What would the trust not invest in?

The Investment Policy Statement outlines that investment decisions must be in keeping with the values of Chippewas of the Thames First Nation, which requires investment managers to restrict their investments to companies that are socially responsible.  A Social Responsibility Index (SRI) is used by the investment community to identify those companies that perform on a scale of above average, average and below average on various indicators of social responsibility.  The investments cannot be made in companies that do not score high on the index.  Any company that is involved in tobacco, alcohol and/or pornography cannot be invested in.

22. Office of Children’s Lawyer?

23. Can I still receive my distribution payment if I did not receive it?

Yes, if you were on the band list at the time the monies were deposited into the trust account.

24. What do I need to do if I am eligible for the distribution payment and haven’t received it?

You need to mail or fax in a written request, requesting your distribution payment.  You MUST include your full name, address, and phone number as well as a copy of the front and back of your (valid) status card.  You can mail to:  Clench Fraud Trust, 641 Jubilee Rd, Muncey, Ontario, NOL IYO or fax to: Clench Fraud Trust fax number (519)264-2628.