Savings Held in Trust
CDIC deposit insurance covers money in eligible accounts and financial products held in trust. For
example, a grandmother (the trustee) might deposit money in trust for her grandson (the beneficiary) to use
when he is an adult.
What’s covered?
From $1 to $100,000 of the total amount in the following accounts and financial products, all
held in trust for the same beneficiary:
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Accounts
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- savings accounts
- chequing accounts
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Financial products
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- GICs or other term deposits with an original term to maturity of 5 years or less
- money orders, certified cheques and bank drafts issued by CDIC members
- debentures issued by loan companies
These deposits must be held in Canadian dollars at a CDIC
member.
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For example . . .
Say you have $5,000 in a savings account in trust for your grandson, Paul. You have provided your bank
with Paul’s full name and address and Paul is identified as beneficiary and this information is on the bank’s
records.
How much would Paul’s trust get from CDIC if your financial institution were to fail?
- CDIC insures up to $100,000 for the beneficiary named on a trust account. In this example, the trust
would get $5,000 from CDIC.
Another example: more than one beneficiary
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CDIC insures up to $100,000 for EACH beneficiary named on a trust account. Say you had $250,000 in a
savings account in trust for two grandchildren, Paul and Lynn. You have provided your bank with the name and
address of both beneficiaries and this information is on the bank’s records. The bank has also recorded that
you want the money to be divided equally between the two grandchildren ($125,000 each).*
In this case:
- You, as the trustee, would be considered to hold $125,000 (half of $250,000) for the benefit of EACH of
Paul and Lynn. CDIC insures up to $100,000 for each beneficiary. The trust would receive $200,000.
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Did you know?
CDIC calculates deposits you hold in trust for someone separately from
savings you hold in your name (not held in trust for someone). You could have insurable deposits you hold in
trust (up to $100,000 per beneficiary) and in your own name (up to $100,000). Joint accounts and eligible
deposits held in RRSPs and RRIFs are also calculated separately.
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CDIC covers more!
Click on any of the following to see what else CDIC covers: savings held in one name, savings held in an RRSP, savings held in a RRIF, and savings held for paying realty taxes on mortgage payments. CDIC also
insures savings held in more than one name (joint
deposits).
* The depositor must inform the financial institution each year
(during the month of May) as to how the money in the trust account is to be divided amongst beneficiaries.
See CDIC’s Joint and Trust Account Disclosure By-law.
