Should You Put a Bank Account in a Trust in Canada?

Can You Put a Bank Account in a Trust?

Yes, you can put a bank account in a trust.  

But remember that when you put the bank account into a trust, you are transferring ownership from yourself to the trustee. The bank will usually require the account to be titled in the name of the trust, for example, “ABC Family Trust.”  

The trustee will be responsible for managing the account in accordance with the trust document for the beneficiaries.

The trustee will have control over deposits and withdrawals. 

From a tax perspective, the bank account will now need to follow the trust rules, and income may be taxed in the trust or passed through to the beneficiaries. 

So, while you can put a bank account in a trust, it only makes sense in certain situations. 

Written By Tiffany Woodfield, Financial Advisor, TEP®, CRPC®, CIM®

Why Do People Put Bank Accounts in a Trust?

People put bank accounts in a trust for three main reasons:

1. To avoid probate and delays
2. To plan for incapacity
3. For privacy and control

Avoiding Probate and Delays

If your bank account is held in a trust, it can help get money to your loved ones more quickly after you die.

Alternatively, if the bank account is named in the will and is not in a trust, your beneficiaries will need to wait longer to access the funds in the account. A will needs to go through the formal probate process, which can be time-consuming and expensive. 

Planning for Incapacity

We all know life happens when we least expect it, and as we get older, the risk of incapacity increases.

The benefit of a trust is that the trustee can manage the account if you become unable to make financial decisions. Bills can get paid and money can be used appropriately, according to your wishes. Without this, any incapacity planning will require a court-appointed guardian. 

Privacy and Estate Control

When a will goes through probate, it automatically becomes a public document in most cases.

The fact that it’s public means others, and not just beneficiaries, have access to the contents of your will. A trust offers much more privacy as it rarely becomes a public document. That privacy creates peace of mind and can help prevent family disputes and ensure your wishes are followed. 

When Does It Make Sense to Put a Bank Account in a Trust?

You may want to put a bank account into a trust when it is part of a larger estate and you want assets to transfer smoothly.  

If you have a blended family, a trust can protect your current spouse while ensuring that children from prior relationships receive their intended shares. If you want to use the account for future planning needs, a trust can be a helpful option. 

A trust may allow you to cover future needs, such as healthcare and education, without having to rewrite a will. With a trust, you’ll also have a trustee who has clear instructions on what you want the money used for.

What Are the Downsides of Putting Bank Accounts in a Trust?

Putting a bank account in a trust can slow down everyday access because now you need to go through the trustee to have access.  

Some banks may limit what the trustee can do, resulting in extra paperwork and potentially higher fees for trust accounts. People often don’t realize that trusts have their own tax rules, which require filings and ongoing care to keep the trust valid. So you need to weigh the benefits of a trust versus the additional complexity and costs. 

Summary of Key Points 

• A trust beats a will for speed and privacy. Bank accounts in a trust skip probate, reach beneficiaries faster, and never become a public document.
• Not everyone needs a trust. A simple estate with no family conflict or complexity likely doesn’t justify the added cost and paperwork.
• Blended families benefit most. If you have children from a prior relationship, a trust protects your current spouse while preserving each child’s intended share.
• Incapacity is a reason to act now. A trust lets a trustee manage your account if you can no longer make financial decisions.
• Weigh the tradeoffs honestly. Trusts come with tax filings, bank restrictions, and ongoing admin. The right choice depends on your estate size, family dynamics, and long-term goals.

My Honest Opinion

If you have a simple situation, such as a smaller estate and no additional family complexities, putting a bank account into a trust probably isn’t worth it. 

But if you have a blended family or you’re worried about potential conflict among beneficiaries and a possible challenge to a will, a trust starts to sound like a good idea. In BC in particular, challenges to wills can occur. 

My recommendation is to ask yourself the following questions:

• What are the family dynamics? 
• Am I worried about conflicts or someone being vulnerable?
• What impact would it have on beneficiaries if the money is tied up after I pass? 
• How complex is my estate?
  • Do I have significant assets?
  • Do all my beneficiaries live in the same country?
  • Are the assets all in our country?

And remember to speak to a professional outside the bank about your particular situation so you can get advice and guidance on your overall estate plan. 

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Read More:

💎 How Much Money Can You Put in a Trust in Canada?

💎 How Does a Family Trust Work in BC?

💎 How Much Does It Cost to Set Up a Trust in BC?

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