Trust Agreement (Canada)
TRUST AGREEMENT
This Trust Agreement (the "Agreement") is made as of [Effective Date] (the "Effective Date") in the Province of [Province], Canada.
BETWEEN:
[Settlor Name], born [Settlor Date of Birth], of [Settlor Address], occupation: [Settlor Occupation] (the "Settlor")
- and -
[Trustee Name], of [Trustee Address], being the Settlor’s [Trustee Relationship] (the "Trustee")
RECITALS
A. The Settlor wishes to create an inter vivos (living) trust for the benefit of the beneficiaries named herein and to transfer certain property to the Trustee to be held, managed, and distributed in accordance with the terms of this Agreement.
B. This trust is a [Trust Type] trust. The Settlor has the legal capacity and authority to create this trust and to transfer property into it.
C. The Trustee has agreed to act as trustee of this trust and to hold, manage, and distribute the trust property in accordance with the terms of this Agreement and the fiduciary duties imposed by the common law and the applicable provincial Trustee Act.
D. The three certainties required for the creation of a valid trust under Canadian common law are present: certainty of intention (the Settlor intends to create a trust), certainty of subject matter (the trust property is identified), and certainty of objects (the beneficiaries are identifiable).
NOW THEREFORE, in consideration of the mutual covenants and agreements herein, and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties agree as follows:
1. ESTABLISHMENT OF TRUST
1.1 Creation. The Settlor hereby establishes a trust to be known as "[Trust Name]" (the "Trust") and transfers to the Trustee the property described in Schedule A attached hereto, together with an initial cash contribution of CAD $[Initial Contribution], to be held, managed, invested, and distributed by the Trustee in accordance with the terms and conditions of this Agreement.
1.2 Acceptance. The Trustee acknowledges receipt of the trust property described in Schedule A and the initial contribution and agrees to hold such property in trust upon the terms and conditions set forth in this Agreement.
1.3 Trust Type. This Trust is a [Trust Type] inter vivos trust created during the lifetime of the Settlor. This Trust is not a testamentary trust and is not governed by the rules applicable to testamentary trusts.
1.4 Additional Property. The Settlor or any other person may, from time to time, transfer additional property to the Trustee to be held as part of the Trust. The Trustee is not obligated to accept any additional property. Any property accepted by the Trustee shall be subject to the terms of this Agreement.
2. TRUST PROPERTY
2.1 Schedule A. The initial trust property consists of the following assets transferred by the Settlor to the Trustee: [Trust Property]
2.2 Transfer of Title. The Settlor shall execute all documents and take all actions necessary to transfer legal title to the trust property to the Trustee, including but not limited to executing deeds for real property, completing account transfer forms for registered accounts (RRSPs, TFSAs, and other registered plans), and endorsing certificates or instruments of title.
3. BENEFICIARIES
3.1 Primary Beneficiaries. The primary beneficiaries of this Trust are: [Primary Beneficiaries]
3.2 Contingent Beneficiaries. In the event that any primary beneficiary predeceases the Settlor or is otherwise unable to receive their share: [Contingent Beneficiaries]
4. DISTRIBUTION OF TRUST PROPERTY
4.1 Distribution Timing. The trust property shall be distributed to the beneficiaries as follows: [Distribution Timing].
4.2 Distribution Schedule. The specific distribution terms are: [Distribution Details]
4.3 Income Distribution. During the continuance of the Trust, the Trustee may, in the Trustee’s absolute discretion, pay or apply all or any part of the net income of the Trust to or for the benefit of any one or more of the beneficiaries in such amounts and proportions as the Trustee in the Trustee’s absolute discretion determines. Any income not distributed in a taxation year shall be accumulated and added to the capital of the Trust.
4.4 Capital Encroachment. The Trustee may, in the Trustee’s absolute discretion, pay, transfer, or apply all or any part of the capital of the Trust to or for the benefit of any one or more of the beneficiaries as the Trustee considers advisable for the maintenance, education, advancement, or benefit of such beneficiary.
5. TRUSTEE POWERS AND DUTIES
5.1 Fiduciary Duties. The Trustee shall act in good faith and in the best interests of the beneficiaries. The Trustee owes the beneficiaries the fiduciary duties recognized at common law and under the applicable provincial Trustee Act, including the duty of loyalty, the duty to act impartially among beneficiaries, the duty to invest prudently, and the duty to render accounts.
5.2 Powers. Without limiting the powers conferred by the applicable provincial Trustee Act and the common law, the Trustee shall have the following powers: [Trustee Powers]
5.3 Prudent Investment. The Trustee shall exercise the care, skill, diligence, and judgment that a prudent investor would exercise in making investments in light of the purposes, terms, distribution requirements, and other circumstances of the Trust, as required by the applicable provincial Trustee Act and the common law Prudent Investor Rule.
5.4 Accounting. The Trustee shall maintain accurate records of all trust transactions and shall provide an annual accounting to all adult beneficiaries and to the guardians of any minor beneficiaries. The accounting shall include a statement of all income received, all capital gains and losses, all expenses paid, all distributions made, and a current inventory of trust assets with estimated market values.
6. TRUSTEE COMPENSATION AND EXPENSES
6.1 Compensation. [Trustee Compensation]. [Custom Compensation]
6.2 Expenses. The Trustee shall be entitled to reimbursement from the trust property for all reasonable and necessary expenses incurred in the administration of the Trust, including but not limited to legal fees, accounting fees, investment advisory fees, property management costs, and tax preparation fees.
7. SUCCESSOR TRUSTEE
7.1 Appointment. If the Trustee ceases to serve as trustee of this Trust by reason of death, incapacity, resignation, or removal, [Successor Trustee Name], of [Successor Trustee Address], shall serve as the Successor Trustee of this Trust with all the rights, powers, and obligations of the original Trustee.
7.2 Resignation. The Trustee may resign by providing thirty (30) days’ written notice to the Settlor (if living and competent) and to all adult beneficiaries. The resignation shall not take effect until a successor trustee has been appointed and has accepted the trusteeship.
7.3 Removal. The Settlor, while living and competent, may remove the Trustee at any time by written notice. After the Settlor’s death or incapacity, the Trustee may be removed by the unanimous written consent of all adult beneficiaries or by order of a court of competent jurisdiction.
8. INCAPACITY OF THE SETTLOR
8.1 Determination of Incapacity. The Settlor shall be deemed to be incapacitated for the purposes of this Agreement when such incapacity is established [Incapacity Standard].
8.2 Management During Incapacity. During any period of the Settlor’s incapacity, the Trustee shall manage the trust property for the Settlor’s benefit and may use the income and capital of the Trust to provide for the Settlor’s health, maintenance, support, and comfort in a manner consistent with the Settlor’s accustomed standard of living. The Trustee may also provide for the support of any person whom the Settlor was legally or morally obligated to support immediately before the incapacity.
9. REVOCATION AND AMENDMENT
10. TAX PROVISIONS
10.1 T3 Filing. The Trustee shall file a T3 Trust Income Tax and Information Return with the Canada Revenue Agency for each taxation year of the Trust, as required by the Income Tax Act (Canada). The taxation year of this Trust shall end on [Tax Year End]. For an inter vivos trust, the taxation year must end on December 31 (ITA s.249(1)(b)).
10.2 21-Year Deemed Disposition. The Trustee and the beneficiaries acknowledge that under the Income Tax Act s.104(4), the trust property is deemed to be disposed of at fair market value every 21 years from the date the trust was created, which may trigger a capital gains tax liability. The Trustee shall plan for this deemed disposition and may distribute trust property to beneficiaries before the 21-year anniversary to avoid or minimize the tax consequences.
10.3 Tax Elections. The Trustee is authorized to make any tax elections available under the Income Tax Act or any applicable provincial tax legislation, including the preferred beneficiary election under ITA s.104(14) and the designation of taxable capital gains under ITA s.104(21), in order to minimize the overall tax burden on the Trust and its beneficiaries.
11. TERMINATION
11.1 Termination. This Trust shall terminate upon the earliest of: (a) the distribution of all trust property to the beneficiaries in accordance with this Agreement; (b) the revocation of the Trust by the Settlor (if revocable); (c) the date that is twenty-one (21) years after the death of the last surviving beneficiary who was alive at the date of this Agreement (the perpetuity period at common law); or (d) as otherwise ordered by a court of competent jurisdiction.
11.2 Final Distribution. Upon termination of the Trust, the Trustee shall distribute all remaining trust property to the beneficiaries entitled thereto under the terms of this Agreement, after paying or providing for all outstanding debts, taxes, and expenses of the Trust.
12. ADDITIONAL PROVISIONS
12.1 [Additional Provisions]
13. GENERAL PROVISIONS
13.1 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Province of [Province] and the applicable federal laws of Canada, including the Income Tax Act (Canada).
13.2 Severability. If any provision of this Agreement is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, the remaining provisions shall continue in full force and effect.
13.3 Entire Agreement. This Agreement, including Schedule A attached hereto, constitutes the entire agreement between the Settlor and the Trustee with respect to the trust created herein and supersedes all prior agreements, understandings, negotiations, and discussions, whether oral or written.
13.4 Notices. Any notice required or permitted under this Agreement shall be in writing and shall be deemed given when delivered personally, sent by registered mail, or sent by email with confirmed receipt to the addresses set forth above or to such other address as a party may designate by written notice.
13.5 Binding Effect. This Agreement shall be binding upon and enure to the benefit of the parties and their respective heirs, executors, administrators, successors, and assigns.
IN WITNESS WHEREOF, the Settlor and the Trustee have executed this Trust Agreement as of the Effective Date.
SCHEDULE A — TRUST PROPERTY
The following property is transferred by the Settlor to the Trustee to be held in trust in accordance with the terms of this Trust Agreement:
[Trust Property]
Initial Cash Contribution: CAD $[Initial Contribution]
Settlor
________________
Signature
Trustee
________________
Signature
What Is a Trust Agreement (Canada)?
A Trust Agreement in Canada transfers assets to a trustee to hold and manage for named beneficiaries on the terms set out in the deed, governed primarily by provincial Trustee Acts and the common law of trusts.
Canadian trust law is rooted in English common law and requires the presence of the three certainties for a valid trust: certainty of intention (the settlor clearly intends to create a trust), certainty of subject matter (the trust property is identifiable), and certainty of objects (the beneficiaries are ascertainable). These principles were confirmed by the Supreme Court of Canada and are codified in part through provincial Trustee Acts — Ontario’s Trustee Act (R.S.O. 1990, c. T.23), British Columbia’s Trustee Act (R.S.B.C. 1996, c. 464), and Alberta’s Trustee Act (R.S.A. 2000, c. T-8).
The tax treatment of inter vivos trusts in Canada is governed by the Income Tax Act (ITA). Inter vivos trusts are taxed at the top marginal tax rate on any income retained within the trust (ITA s.122(1)). However, income distributed to beneficiaries is taxed in the beneficiaries’ hands at their marginal rates, making distributions a key tax planning strategy. The trust must file a T3 Trust Income Tax and Information Return annually with the Canada Revenue Agency. Critically, ITA s.104(4) imposes a 21-year deemed disposition rule: every 21 years, trust property is deemed disposed of at fair market value, potentially triggering significant capital gains tax liabilities that require advance planning.
A trust may be revocable (the settlor retains the power to amend or terminate it during their lifetime) or irrevocable (the settlor permanently relinquishes control). Alter ego trusts and joint partner trusts, available to settlors age 65 and older, receive special tax treatment under ITA s.104(4)(a) — the 21-year deemed disposition is deferred until the death of the settlor (or the last surviving partner), making them valuable estate planning tools for older Canadians.
The legal framework governing the Trust Agreement (Canada) in Canada draws on several key statutes and regulatory bodies. Under Canadian law, PIPEDA and provincial privacy legislation govern personal data processed under this agreement. The Competition Act (R.S.C. 1985, c. C-34), enforced by the Competition Bureau, protects consumer rights. Section 15 of the Canada Business Corporations Act governs corporate obligations. Provincial superior courts and the Federal Court of Canada have jurisdiction for civil matters. The Canada Revenue Agency (CRA) administers tax compliance obligations. Parties executing a Trust Agreement (Canada) in Canada should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Provincial Succession Law Reform Acts sets the foundational requirements.
When Do You Need a Trust Agreement (Canada)?
A Canadian Trust Agreement is needed when an individual wants to transfer assets to a trustee for structured management and distribution, rather than relying solely on a will. This is particularly important for probate avoidance — assets held in a properly funded trust pass directly to beneficiaries without the delays, costs, and public disclosure of the provincial probate process. In Ontario, the Estate Administration Tax is 1.5% on estate values over $50,000, making trust-based planning valuable for larger estates.
Parents with minor children use trusts to establish management provisions for inherited assets, confirming that funds are used for education, health care, and living expenses under the trustee’s supervision until the child reaches an age specified by the settlor. This avoids the need for a court-appointed guardian of property.
Individuals concerned about incapacity planning create trusts to confirm seamless management of their financial affairs if they become unable to manage them. Unlike a power of attorney (which may be challenged or may not cover all assets), a funded trust provides the trustee with immediate authority to manage trust assets without court intervention.
Business owners place closely held business interests in trust to confirm continuity of operations, support succession planning, and potentially implement an estate freeze (transferring future growth to the next generation while crystallizing the current owner’s tax liability).
Settlors who want to protect assets from a beneficiary’s creditors, family law claims, or poor financial judgment include spendthrift provisions that prevent beneficiaries from assigning or encumbering their interest. This is especially relevant for beneficiaries with addiction issues, high-risk businesses, or unstable relationships.
Parties in Canada should prepare a Trust Agreement (Canada) proactively rather than waiting for a dispute to arise. Courts interpret agreements based on the written terms rather than oral representations. Under Canadian law, PIPEDA and provincial privacy legislation govern personal data processed under this agreement. The Competition Act (R.S.C. 1985, c. C-34), enforced by the Competition Bureau, protects consumer rights. Section 15 of the Canada Business Corporations Act governs corporate obligations. Provincial superior courts and the Federal Court of Canada have jurisdiction for civil matters. The Canada Revenue Agency (CRA) administers tax compliance obligations. Where the transaction involves regulated activities, prior approval from the relevant authority may be required before execution.
What to Include in Your Trust Agreement (Canada)
A valid Canadian Trust Agreement must identify the settlor, the initial trustee, and the successor trustee with full legal names and contact information. The trust must have a formal name and specify whether it is revocable or irrevocable — this distinction has significant legal and tax consequences. The agreement must state the governing province, as trust administration is governed by the applicable provincial Trustee Act.
The trust property (Schedule A) must be described with sufficient certainty to satisfy the common law requirement of certainty of subject matter. Real property should be identified by legal description or municipal address, financial accounts by institution and account number, and personal property by specific description. The settlor must actually transfer legal title to the trust property to the trustee — an unfunded trust (where assets are listed but not transferred) provides no benefit.
Beneficiary designations must identify primary and contingent beneficiaries with sufficient certainty to satisfy the requirement of certainty of objects. Include the distribution schedule (when and how trust property is distributed), provisions for minor beneficiaries, and contingent beneficiary provisions (what happens if a primary beneficiary predeceases the settlor). Specify whether distribution is per stirpes (to a deceased beneficiary’s descendants) or per capita (equally among surviving beneficiaries).
Trustee powers should be explicitly stated, including investment powers (subject to the Prudent Investor Rule), the power to sell and acquire property, the power to borrow and mortgage, the power to make tax elections, and the power to employ professional advisors. Compensation provisions must specify whether the trustee serves gratuitously or receives compensation. Include provisions for trustee resignation, removal, and succession. Tax provisions must address the annual T3 filing requirement, the 21-year deemed disposition rule, and the trust’s December 31 taxation year-end.
Additional compliance elements for a Trust Agreement (Canada) used in Canada include: Under Canadian law, PIPEDA and provincial privacy legislation govern personal data processed under this agreement. The Competition Act (R.S.C. 1985, c. C-34), enforced by the Competition Bureau, protects consumer rights. Section 15 of the Canada Business Corporations Act governs corporate obligations. Provincial superior courts and the Federal Court of Canada have jurisdiction for civil matters. The Canada Revenue Agency (CRA) administers tax compliance obligations. Forms-legal.com provides this template as a starting point for Canada-compliant documentation.
Sources & Citations
Statutory citations link to official government sources.
- R.S.C. 1985, c. C-34CA official
Cite this page
Reference this free template in an article, syllabus, or research note:
Forms Legal. (2026). Trust Agreement (Canada) (Canada) [Legal document template]. Forms Legal. https://forms-legal.com/canada/estate-planning/wills/trust-agreement-canada
"Trust Agreement (Canada) (Canada)." Forms Legal, 2026, https://forms-legal.com/canada/estate-planning/wills/trust-agreement-canada.
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title = {Trust Agreement (Canada) (Canada)},
year = {2026},
howpublished = {\url{https://forms-legal.com/canada/estate-planning/wills/trust-agreement-canada}},
note = {Free legal document template. Based on Provincial Succession Law Reform Acts}
}Also available for these jurisdictions:
Frequently Asked Questions
An inter vivos (living) trust in Canada is a trust created during the settlor's lifetime, as opposed to a testamentary trust created by will. The settlor transfers property to a trustee who manages the property for designated beneficiaries. Canadian trust law requires three certainties for a valid trust: certainty of intention, certainty of subject matter, and certainty of objects, as confirmed by the Supreme Court of Canada. Inter vivos trusts are governed by provincial Trustee Acts — Ontario's Trustee Act (R.S.O. 1990, c. T.23), British Columbia's Trustee Act (R.S.B.C. 1996, c. 464), and Alberta's Trustee Act (R.S.A. 2000, c. T-8) — as well as the Income Tax Act (R.S.C. 1985, c. 1 (5th Supp.)) for tax purposes. Section 104 of the Income Tax Act treats inter vivos trusts as separate taxpayers subject to tax at the top marginal rate on retained income. Section 122(1) of the Income Tax Act sets the applicable tax rate. Section 104(4) imposes the 21-year deemed disposition rule, requiring trust property to be valued at fair market value every 21 years. The trust must file a T3 Trust Income Tax and Information Return annually with the Canada Revenue Agency. In Quebec, inter vivos trusts are governed by Articles 1260 to 1298 of the Civil Code of Quebec (C.C.Q.) rather than common law. Forms-legal.com provides this template as a starting point for Canada-compliant documentation.
The 21-year deemed disposition rule is found in Section 104(4) of the Income Tax Act (R.S.C. 1985, c. 1 (5th Supp.)). Under this rule, trust property is deemed disposed of at fair market value every 21 years from the date the trust was created, potentially triggering significant capital gains tax liabilities. The Canada Revenue Agency (CRA) treats this deemed disposition as if the trust sold all its assets at fair market value on the anniversary date, with any accrued capital gains taxable in the trust at the top marginal rate. Trustees should plan distributions of capital property to beneficiaries before the 21-year anniversary to minimize tax liability, since a distribution to a beneficiary at cost base under Section 107(2) of the Income Tax Act can defer the capital gains tax. Alter ego trusts and joint partner trusts under Section 104(4)(a) of the Income Tax Act receive preferential treatment — the deemed disposition is deferred until the death of the settlor (for alter ego trusts) or the last surviving partner (for joint partner trusts). These trusts are available only to settlors aged 65 or older under Section 248(1) of the Income Tax Act. Professional trust and tax advisors at the Canada Revenue Agency's Charities and Trust section administer T3 filing requirements. The Tax Court of Canada adjudicates disputes regarding Section 104(4) deemed dispositions. Forms-legal.com provides this template as a starting point for Canada-compliant documentation.
Yes. Inter vivos trusts in Canada must file a T3 Trust Income Tax and Information Return annually with the Canada Revenue Agency (CRA) under Section 150(1)(c) of the Income Tax Act (R.S.C. 1985, c. 1 (5th Supp.)). The trust's taxation year must end on December 31 under Section 249(1) of the Income Tax Act. The T3 return is due 90 days after the end of the trust's taxation year — typically March 31 of the following calendar year. Beginning with the 2023 taxation year, Section 204.2 of the Income Tax Act and the new trust reporting rules (introduced by the 2022 federal budget) require most inter vivos trusts to file a T3 return annually and disclose information about all trustees, beneficiaries, settlors, and controlling persons, even if the trust has no income. Failure to file the expanded T3 disclosure may result in penalties under Section 162(7) of the Income Tax Act. The trust is taxed at the top marginal rate (currently 33% federally) under Section 122(1) of the Income Tax Act on any income retained within the trust. However, income designated as paid or payable to beneficiaries under Section 104(13) of the Income Tax Act is deducted from the trust's income and taxed in the beneficiaries' hands at their marginal rates. The CRA administers T3 filings through its Trust Returns Processing Centre. The Tax Court of Canada adjudicates disputes regarding trust taxation. Forms-legal.com provides this template as a starting point for Canada-compliant documentation.
A Trust Agreement (Canada) does not legally require a lawyer in Canada, and individuals and businesses may draft and execute the document independently. The Provincial Succession Law Reform Acts does not mandate legal representation for the creation or signing of this type of document. However, seeking independent legal advice from a qualified Canada lawyer is recommended for transactions involving substantial financial value, complex regulatory requirements, or cross-border elements where multiple legal jurisdictions may apply. A lawyer can verify that the document complies with all applicable statutory requirements, identify potential risks specific to the transaction, and confirm that the terms adequately protect the interests of all parties involved. The Federal Court of Canada has jurisdiction over disputes arising from this type of document, and Corporations Canada may impose additional compliance obligations depending on the nature of the underlying transaction. Professional legal review is particularly advisable where the document will be submitted to government agencies or used as evidence in legal proceedings.
A Trust Agreement (Canada) does not legally require a lawyer in Canada, though legal advice is recommended for complex transactions. Under Canadian law, individuals may draft and execute this type of document independently. The Competition Act (R.S.C. 1985, c. C-34) provides consumer protections. However, Corporations Canada, the Canada Revenue Agency (CRA), or provincial regulatory bodies may have specific requirements. For property transactions, provincial land title offices require qualified lawyers or notaries. PIPEDA and provincial privacy legislation impose obligations on parties handling personal data. Where disputes arise, provincial superior courts or the Federal Court of Canada have jurisdiction. Forms-legal.com provides this template as a starting point — always review with a qualified Canadian lawyer for significant transactions.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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