What is a trust in BC?

A trust is a legal arrangement where one person (the trustee) holds and manages property for the benefit of others (the beneficiaries), under terms set by the person who created it (the settlor). It can be created during your lifetime (an inter vivos trust) or through your will (a testamentary trust). Trusts are used for managing property, reducing tax, avoiding probate, and controlling how and when beneficiaries receive assets.

Do trusts avoid probate in BC?

Some do. Assets held in an alter ego trust or joint spousal trust pass outside your estate on death, so they are not subject to BC probate fees and are harder to challenge through a will-variation claim. Assets that stay in your own name still go through probate. Whether a trust is worth it depends on your assets and age — alter ego and joint spousal trusts are only available from age 65.

What is a bare trust in BC?

A bare trust separates legal ownership (the named owner on title) from beneficial ownership (who actually benefits). It is common in real estate — for example, a parent adding an adult child to title while the child holds their interest in trust for the parent. A bare trust does not file its own tax return, but recent CRA rules have expanded bare-trust reporting, so get advice before relying on one.

What is a trustee of a will or estate?

Strictly, a trustee manages a trust, while the person who carries out your will is your executor. The two roles often sit with the same person, which is why people speak of the trustee of a will or estate. A trustee holds and manages property for the beneficiaries under the trust's terms — investing it prudently, keeping it separate from their own assets, accounting for it, and distributing it as the trust directs. Where a will sets up an ongoing trust (say, holding a child's inheritance until they reach a set age), the person who runs that trust is genuinely a trustee, and they owe the beneficiaries a fiduciary duty under BC's Trustee Act.

What is the difference between a trustee and an executor?

An executor administers your estate after death: they apply for probate if needed, gather the assets, pay the debts and taxes, and distribute what is left under your will. The executor's job winds down once the estate is settled. A trustee manages an ongoing trust — property held for beneficiaries over time, on the terms the trust sets, which can run for years. The same person is frequently named to both roles, first acting as executor to settle the estate and then as trustee of any trust the will creates. Both owe a fiduciary duty to the beneficiaries, but the executor settles the estate while the trustee holds and manages property going forward.

Can a trustee also be a beneficiary?

Yes. A trustee can also be a beneficiary of the same trust, and this is common — in an alter ego or joint spousal trust, for example, the person who creates the trust is both trustee and beneficiary during their lifetime. The trustee still owes a fiduciary duty to every beneficiary, so where a trustee is one of several beneficiaries they must act fairly toward the others and cannot prefer their own interest beyond what the trust allows. A sole trustee who is also the sole beneficiary generally cannot hold a valid trust, because there is no one for the duty to run to.

Types of Trusts in BC: Alter Ego, Family, Disability, and Bare Trusts

A trust is a legal arrangement where one person — the trustee — holds and manages property for the benefit of others, the beneficiaries, on terms set by the person who created it, the settlor. You can create a trust during your lifetime (an inter vivos trust) or through your will (a testamentary trust).

Trusts do several jobs in a BC estate plan: managing property, reducing or deferring tax, avoiding probate fees, preventing family disputes, and controlling when and how beneficiaries receive assets. Below are the trusts we set up most often, and what each one is for.

What does a trustee do?

The trustee is the person — or company — who holds and manages the trust property for the beneficiaries. The trustee does not own the assets for their own benefit; they hold legal title and are bound to act in the beneficiaries’ interest under the terms of the trust and BC’s Trustee Act. In practice that means investing the property prudently, keeping it separate from their own, accounting for what comes in and goes out, and distributing income or capital when and how the trust says to.

A trustee owes the beneficiaries a fiduciary duty — the highest standard of good faith the law recognises. They cannot prefer one beneficiary over another except as the trust allows, cannot profit personally from the role beyond any compensation the trust or the court permits, and can be held personally liable for losses caused by a breach. You can name more than one trustee, and you can name an alternate to step in if the first cannot act.

People often use “trustee” and “executor” interchangeably, but they are not the same role — an executor administers an estate through your will, while a trustee manages an ongoing trust. The two questions below sort out the difference.

Alter ego trusts

Available to individuals over 65, an alter ego trust lets the settlor transfer assets into the trust on a tax-deferred basis, deferring income tax until death. The settlor is both trustee and beneficiary during their lifetime, and the trust’s terms govern distribution after death — avoiding probate fees and offering protection from will-variation claims.

Joint spousal trusts

Similar to an alter ego trust but for spouses over 65, allowing assets to be transferred in on a tax-deferred basis. Both spouses act as trustees and beneficiaries, and the trust’s terms dictate how assets are distributed after the death of the surviving spouse.

Family trusts

Common in family-run businesses, where the trust owns shares in the family company. Parents typically serve as trustees, controlling the distribution of company profits to beneficiaries, including children. The structure supports income splitting and a smooth transition of business control to the next generation — it works hand in hand with the company’s share structure.

Disability trusts

Set up either to provide for a disabled child after the parents’ death or to manage a disabled person’s assets while preserving eligibility for government disability benefits. These trusts carry specific restrictions tailored to the beneficiary’s needs.

Bare trusts

A bare trust reflects the distinction between legal ownership (the named owner) and beneficial ownership (who actually benefits). It is common in real estate — to record each party’s true financial stake, or in planning scenarios like a parent adding a child as a joint owner, where the child declares they hold their interest in trust for the parent to manage capital-gains exposure.

Which trust is right for you?

Each trust serves a distinct purpose — asset protection, tax planning, probate avoidance, or providing for someone who cannot manage assets themselves — and the right choice depends on your age, your assets, and your family. Our estate planning team will walk through your situation and set up the structure that fits. Get in touch to start.