{"id":950834,"date":"2021-11-10T13:24:48","date_gmt":"2021-11-10T18:24:48","guid":{"rendered":"https:\/\/www.finder.com\/ca\/?p=950834"},"modified":"2026-03-09T18:27:22","modified_gmt":"2026-03-09T22:27:22","slug":"in-trust-accounts","status":"publish","type":"post","link":"https:\/\/www.finder.com\/ca\/savings-accounts\/in-trust-accounts","title":{"rendered":"What is an in-trust account?"},"content":{"rendered":"

An in-trust account is an \u201cinformal trust\u201d that lets you invest money on behalf of a child. It\u2019s much easier to open than a normal trust, but it\u2019s also less recognized in the eyes of financial and legal authorities if any tax or account ownership issues arise. That said, an in-trust account can be a cheap and effective savings tool if you follow the steps to set up a solid contract.<\/p>

What is an in-trust account?<\/h3>

An in-trust account lets you save or invest money on behalf of a child until they are old enough to carry out their own investments. Much like a regular trust, any cash or investments you put into an informal trust account will be assigned to the child as soon as you make the transfer. This means the contributions can\u2019t be retrieved or revoked if you need the money back since they will officially belong to the account-holding child.<\/p>

How do in-trust accounts in Canada work?<\/h3>

In-trust accounts in Canada work in the following ways:<\/p>

  1. The donor makes contributions.<\/strong> The donor (the one contributing to the account) sets up the trust, names the trustee and beneficiary and transfers the assets. These can come in the form of cash, stocks, bonds, mutual funds, real estate, other property and investments.<\/li>
  2. The trustee handles investments.<\/strong> The trustee (who is often also the donor but may be a trusted relative or financial institution) manages the assets in the account on behalf of the beneficiary (the child) until the child reaches the age of majority in their province. The trustee manages the child\u2019s investment portfolio and can make withdrawals on behalf of the child.<\/li>
  3. The beneficiary eventually gains control of the account.<\/strong> The beneficiary (the child named by the donor) can\u2019t access or manage funds in the account until they reach the age of majority. At this point, they gain the same power to manage their investments as the trustee, with the goal of eventually taking full control of the account.<\/li><\/ol>

    What does in-trust mean?<\/h4>

    To hold something in trust means that you are putting it away in a safe place for the later use by someone else (the person known as a beneficiary with an in-trust account).<\/p><\/div>

    What\u2019s the difference between a regular trust and an in-trust account?<\/h3>

    The main differences between a regular trust and an in-trust account are outlined below:<\/p>
    Regular trusts<\/th>In-trust accounts<\/th><\/tr><\/thead>
    • Has a trust deed that outlines essential components of a trust<\/li>
    • Requires extensive paperwork<\/li>
    • Typically drafted by a lawyer, therefore more expensive<\/li>
    • Much more likely to be seen as legitimate by the Canada Revenue Agency<\/li>
    • Clearly identified donor, trustee and beneficiary<\/li><\/ul><\/td>