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Trusts in Quebec

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In Brief

There are significant differences between trusts created under Common Law and those created under Quebec’s Civil Code, particularly when it comes to the nature of the trust, the functions participants can perform, the ability to change beneficiaries and the variations and terminations of the trust.


In contrast to the former Civil Code of Lower Canada in force before January 1st 1994, the current Quebec Civil Code provides a set of rules governing trusts, property settlement and administration, as well as variations and terminations of trusts.

Transfer of Assets

Common Law vs. Civil Law

Common Law trusts allow for “legal title” of the property to rest with the trustee while “beneficial ownership” resides with the beneficiary.

A trust created under the Civil Code requires the settlor to transfer assets to a separate entity _ a new patrimony by affectation, autonomous and distinct from the settlor, the trustee and the beneficiary. Here, the trustee and beneficiary have no ownership rights to the property now owned by the new entity.

This distinction means a trust in Quebec cannot be a “Bare Trust” or an “Implied Trust.” Even after the transfer of assets, the trust may not exist if the trustee refuses the duties assigned under the trust agreement.

The Trustee

The Quebec Civil Code provides specific rules for appointing the trustee and his or her acceptance of duty. The trustee is assigned the full administration of the property of the trust, including the preservation and maintenance of the assets.

Equally as important, the trustee also has an obligation to increase the patrimony or use it for its intended purpose as specified in the trust agreement.

When a Beneficiary is a Minor

When a beneficiary of the trust is a minor, the trustee is not required to guarantee the administration of the trust to the Public Curator, as is the case for tutors (guardians) and estate liquidators when they are responsible for assets of $25,000 or more.

Other Distinctions

A trustee’s authority is defined in the trust agreement. In the case of a personal or a private trust, the Quebec Civil Code restricts the power of a trustee to appoint a beneficiary only to the class of person clearly determined in the document that creates the trust. While settlors are prevented from appointing themselves as the only trustee, the rules do offer trustees more security than Common Law trusts, when it comes to personal liability.

Multiple Roles

Participants of the trust (i.e. settlor, beneficiary) can play several roles. For example, the settlor or beneficiary can also be trustees, as long as they act jointly with a third party who is neither a settlor nor a beneficiary of the trust. This is true for Common Law trusts except that there is no requirement to act jointly.

The Beneficiary

The trust can have more than one beneficiary, and benefits can be split between income and capital or be a combination of both.

Kinds of Trusts

The Quebec Civil Code provides for three kinds of trusts. While there are rules that apply to all three, there are also specific rules for each of them.

1) Personal Trusts

These trusts are created for personal reasons and use a donation to secure benefits for a determinate or determinable person. Examples: Inter-vivos family and testamentary trusts.

2) Private Trusts

Private trusts are created for specific private purposes like maintaining or preserving a property for a specific use. Example: A Retirement Compensation Arrangement trust (RCA).

3) Social Trusts

This trust is created for social reasons such as supporting cultural, educational, philanthropic, religious or scientific interests. Example: A charitable foundation.

Civil Law Trusts and the Income Tax Act

The Income Tax Act governs the taxation of a trust, even in Quebec. However, the different rules that create the trust under Common Law or Civil Law can result in different tax treatment. It’s important for the trust agreement to address tax matters in context of the rules governing the trust.

The information presented here is for your information only. Sun Life Assurance Company of Canada does not provide legal, accounting, taxation or other professional advice to advisors or their clients. Before you act on any of this information on behalf of a client, always have your client seek advice from a qualified professional including a thorough examination of your client's specific legal/tax situation.

Trusts and Quebec Beneficiaries

Although most provincial taxation is harmonized with the federal Income Tax Act, advisors must keep in mind that the Quebec Tax Act contains special provisions regarding the taxation of trusts and beneficiaries resident in the province on December 31.

For example, recent modifications to the Quebec Tax Act impact Quebec residents who are beneficiaries of a trust resident outside of Quebec. For details on these, refer to the soon to be released Financial Advisor Bulletin on Trusts and Quebec Beneficiaries.

Published: 01/01/2004
Last updated: 01/01/2004

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