Trust Privacy (and its Limits)
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Trusts have long served as a cornerstone of estate planning, primarily valued for their ability to maintain family privacy by avoiding the public nature of a will. When a person dies and their will enters probate, it becomes a public court record, allowing anyone to view the assets and the designated heirs. In contrast, a trust is a private contract between the settlor and the trustee; it does not typically require court filing to be valid, thus keeping the details of a family’s wealth and distribution plans out of the public eye. Historically, this meant that as long as a trust did not earn income or dispose of assets, it could exist for years without ever disclosing its internal structure or the identities of its beneficiaries to the outside world.
Despite this inherent structural privacy, the landscape has shifted dramatically due to new federal transparency measures introduced by the Canada Revenue Agency (CRA). As of the 2023 tax year, express trusts (those created with a clear intent, usually in writing) must file an annual T3 Income Tax and Information Return even if they have no income to report. This represents a significant departure from previous rules where filing was only triggered by financial activity. The CRA’s primary objective with these changes is to enhance beneficial ownership transparency, ensuring they have a digital paper trail of who truly controls and benefits from the assets held within these private arrangements.
The core of this new disclosure regime is Schedule 15, a mandatory form that requires the trust to pull back the curtain on its internal members. Under these rules, trustees must disclose the name, address, date of birth, country of residence, and Tax Identification Number (such as a SIN or Business Number) for every settlor, trustee, beneficiary, and protector of the trust. Even contingent beneficiaries (those who might only receive assets under specific, future conditions) must be identified. Failure to comply can result in substantial penalties, starting at $2,500 and potentially reaching 5% of the highest fair market value of the trust's assets if the omission is deemed gross negligence.
Provincial governments have also introduced their own layers of disclosure, particularly concerning real estate, which further erodes traditional trust privacy. In Alberta, both the Land Titles Act and recent amendments to the Business Corporations Act have increased the transparency requirements for legal entities and arrangements. Trustees holding land in Alberta must also navigate federal overlays like the Underused Housing Tax, which requires filing annual returns for residential properties even if they are not vacant. Furthermore, Alberta’s corporate transparency rules now require nominee or bare trust arrangements (often used to hold title to land) to be more clearly documented to satisfy anti-money laundering standards. So even though Alberta remains a relatively private jurisdiction for asset holders, the connection between a trust and its underlying property is increasingly visible to both federal regulators and provincial authorities.
Ultimately, the privacy of a trust in 2026 is no longer a shield against the government, but rather a shield against the general public. While a trust still prevents access through probate records, the CRA and provincial land authorities now possess considerable access to data regarding these arrangements. In turn, the focus has necessarily shifted from maintaining absolute secrecy to ensuring meticulous compliance with reporting windows. This evolution reflects a global trend where the historic confidentiality of legal arrangements is being systematically traded for the state's ability to combat tax evasion and money laundering.
Contact our law firm today to learn how our legal team can help you plan for the future, including wills, trusts, powers of attorney, personal directives and other estate planning documents, or deal with the legal demands associated with the passing of a loved one. Contact our law firm at 403-400-4092 or via email at Chris@NeufeldLegal.com to schedule a confidential initial consultation.
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