Lesson Trusts

Trust accounts

Read about how to open a trust account and their benefits.

A trust is a legal agreement where assets are entrusted to another person or party to hold (or use) for another person or organization. Typically, a “trustee” designates a “beneficiary”, and the trustee will oversee the beneficiary’s assets with certain responsibilities.

The beneficiary will obtain control of their assets after an agreed upon time (typically age of majority). But before then, the trustees can manage the assets held in trust for the beneficiary(ies).

There are three trust accounts you can open with Questrade. Let's take a closer look below.

Informal Trust

An informal trust is typically opened by an adult for the benefit of another person, usually a minor. Compared to a formal trust, there is less legal documentation required (a trust agreement is not required). In Questrade, the account holder (or the parent) will act as the informal trustee and he/she can open an account for each of their children (beneficiary).

Joint Informal Trust

A joint informal trusts are joint margin accounts opened on behalf of a minor. They don’t require trust agreements and can have the benefits of having more than one trader for more investing opportunities. Joint informal trustees (both parents) can also open multiple accounts for more than one child. 

Typically, tax slips will be under the trustees name instead of the beneficiary for informal and joint informal trust.

Please note: Both informal trusts can only be applicable to someone’s child(ren), not a nephew, niece, grandchild or someone else’s child. 

Formal Trust

Similar to informal trust, a formal trust is typically opened by a trustee on behalf of a beneficiary. In addition, a trust agreement is required that contains assets administered for the benefit of another person or persons.  A formal trust must have a trustee and at least one beneficiary. There are additional formal (legal) documents required when opening the account. These extra documents ensure that any specific account instructions are legally binding.

Any further deposits to the account will be trust assets held beneficially for the beneficiary. The whole idea of a trust account is that the money belongs to someone who has rights to the money but is not given the authority to manage it.

Once a formal/informal trust is created, the funds and positions in the account become the property held in trust for the beneficiary. During the life of a formal/informal trust, the trust assets (held in trust) are legally owned by the trustee(s) and the beneficiary(ies) have beneficial ownership. The reason why the trustees have legal ownership of the trust is because they have to manage and control the trust asset for the beneficiary(ies). Consequently, the beneficiary(ies) will benefit from the trust assets managed by the trustees.

Please note: The information shown in this article may vary slightly from your experience as we work to improve the overall account opening process.

To get started with a trust account, you will need to submit your application online:

  • Log in to your Questrade account.
  • In your Summary page, click + New account in the accounts selection.
    • adding a second account in the summary page
  • Click on See more account types and choose the trust account you wish to open under Entity.
  • Fill out the required account opening information online.
  • Download generated account documents. These may documents include:
    • Formal trust Trading Authorization Form
    • List of Trustees and Beneficiaries
    • Limitation of Benefits Clause
    • Certificate of Formal Trust
  • Fill out the application where necessary and hand sign.
  • Upload or mail your documents in. You can upload your documents by heading over to the Upload documents page under the Account Management tab. Please ensure the documents are clear, easy to read and free of shadows and reflections.

Accepted Documents

  • Photo ID - Drivers license or a passport (with signature page signed). If you are a non-resident of Canada, please provide an agent attested valid ID. For more information about the acceptable photo ID for your application, please check our article here.
  • Address Document - Utility bills statement (phone, internet, or hydro) within the last 6 months.
  • Financial document - Bank account statement (not including investment accounts). Void cheques and direct deposit are not acceptable as financial documents.

Important things to know (Informal Trust documents):

  • Please provide an address and financial document from the trustee(s) on the account.
  • We require a photo ID from the trustee(s) and the beneficiary on the account. Please note that an acceptable form of identification for minor beneficiaries includes citizenship cards, birth certificates and passports (please ensure the bearer’s signature page, when applicable, is visible in the photo).
  • The child of the account holder must be under the age of majority of the province where this child currently resides. We also require a government issued ID to confirm the name and age of the beneficiary (usually birth certificate or passport).

Important things to know (Formal Trust documents):

  • When submitting the copy of your trust agreement, please ensure the “roles” on the online application matches the trust agreement. 
  • The Limitation of Benefits Clause asks for a Business Number (BN) and this refers to your Trust/Tax account number formatted as T########. Please ensure you have your tax number ready when you fill up your documents.
  • Ensure to submit the address and financial documents from the trustee and beneficiaries on the account
  • We require a photo ID from the trustee(s), beneficiary, and settlor on the account. A settlor is anyone who creates and transfers the trust to the trustees. Their name and address should be included when you submit your documents.
  • Sometimes, you may be asked to submit your photo ID + address and financial documents from either the trustee and beneficiaries, and settlor on the account.
  • Formal trust beneficiaries must be Canadian residents which includes Canadian citizens and permanent residents. If the beneficiary is from outside of Canada then we cannot proceed even if the formal trust is established in Canada.
  • Funds in a formal/informal trust account can be withdrawn or transferred back to the beneficiary. However, this can only be done if the beneficiary has reached the age of majority for their province and the funds need to be sent to their bank account or Questrade account. Questrade can also prepare a cheque for the beneficiary if they choose so.
  • Please note that we can also transfer funds back to a bank account as long as it’s under the same account holder. This is possible prior to the beneficiary reaching the age of majority (the funds will still be held in the informal trust environment, just not with Questrade).
  • Typically, we can only process full withdrawals. However, in some cases, we can do a partial withdrawal if the transfer is to an informal trust bank account under the same beneficiary.

Once the beneficiary reaches 18 (or age of majority in their province), trustees can decide when to move the funds and assets to the beneficiary. The beneficiary can open any account type, in their own name, and complete the account opening requirements. Once the document is received via e-mail or uploaded, it should take about 1 day to close the account and 2-4 business days to move the assets in-kind from one account to the other.

  • For Informal Trust rollovers: the Informal Trust Form will need to be completed and submitted.
  • Please note that deposits into registered accounts are contributions for tax-purposes.

Note: The information in this blog is for educational purposes only and should not be used or construed as financial or investment advice by any individual. Information obtained from third parties is believed to be reliable, but no representations or warranty, expressed or implied, is made by Questrade, Inc., its affiliates or any other person to its accuracy.

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