Living Trusts in BC: Does the US-Style Trust Work Here?

If you have read US estate planning advice, you may have been told to set up a revocable living trust to avoid probate. In BC that template does not carry over well: BC law recognizes trusts made during your lifetime, but Canadian tax rules treat a trust you can revoke very differently from US rules.

For people 65 and older, the closest local equivalents are alter ego and joint partner trusts. This guide explains how BC differs, what a trust can and cannot do here, and how it compares with a will.

Why the US-style living trust does not carry over to BC

The “revocable living trust” recommended in US estate planning is not a standard tool in BC. BC law does let you create a trust during your lifetime, but Canadian income tax rules treat a trust that you can revoke or control very differently from US rules, and moving a home into a trust can trigger property transfer tax. A US template is not something to copy and sign here.

A trust made during your life is often called an inter vivos or living trust: you transfer property to a trustee, who holds it for the beneficiaries on the terms you set. The CRA describes an inter vivos trust simply as one that is not a testamentary trust. Assets properly held in a trust before you die do not pass to your executor, so they are not counted for BC probate fees, which are charged only on property that passes to the personal representative at death (Probate Fee Act s 1).

The Canadian tax rules that change the picture

• Moving property in can be a taxable sale. Transferring property to a trust can be treated as a disposition at fair market value, which can trigger capital gains tax on any increase in value (Income Tax Act s 69(1)(b)). A tax-deferred transfer is available only for specific kinds of trusts (s 73(1.01)–(1.02)).
• Revocable trusts are taxed back to you. If trust property can revert to you, can pass to people you choose after the trust is created, or cannot be dealt with without your consent, the income and capital gains on it are attributed to you while you are alive and resident in Canada (s 75(2)).
• A deemed sale every 21 years. Most trusts are treated as selling their capital property at fair market value every 21 years (s 104(4)).
• Annual filings. As of 1 November 2026, the CRA says a Canadian-resident express trust generally must file a T3 return every year, even if it has no income, unless it is a listed exception.

None of this rules out a trust, but it explains why the US advice to put everything into a revocable trust does not fit Canadian tax law.

The closest BC equivalents: alter ego and joint partner trusts

Canadian tax law has two trusts designed for later-life planning. According to the CRA, an alter ego trust is created after 1999 by a settlor who was 65 or older at the time; the settlor is entitled to all of the trust's income during their lifetime, and no one else can receive its income or capital while they are alive. A joint spousal or common-law partner trust works the same way for a couple, until the later of their deaths.

Property can be moved into these trusts at its tax cost instead of fair market value (Income Tax Act s 73(1.01)–(1.02)). The tax is deferred, not avoided: the trust is deemed to sell its capital property at fair market value at the settlor's death, or at the later death for a couple (s 104(4)(a)(iv)). Our guide to alter ego and joint partner trusts in BC looks at who tends to benefit.

Can you put your house in a trust in BC?

You can, but check property transfer tax first. Registering your home in a trustee's name is a transfer of land, and the person applying to be registered must pay the tax unless an exemption applies (Property Transfer Tax Act ss 1, 2(1)).

The Province's list of exemptions includes transfers between a settlor and the Public Guardian and Trustee or a trust company where the trust is solely for the settlor's benefit. It does not list a general exemption for moving your home into a trust run by you or your family, so tax may be payable on the home's fair market value. Before transferring, also check whether your mortgage lender must consent and how the home will be treated for income tax. For holding property through a trust more generally, see holding BC real estate in trust.

Living trust or will in BC?

You still need a will if you set up a trust, because anything not transferred into the trust passes under your will. The main reasons people consider a trust as well are:

• Probate fees. BC charges nothing on the first $25,000 of an estate, $6 per $1,000 from $25,000 to $50,000, and $14 per $1,000 above $50,000 (Probate Fee Act s 2). As an example only, an estate valued at $800,000 would pay $10,650. Assets held in a trust are not counted.
• Privacy. A probate application includes a statement of the estate's assets filed with the court. Assets in a trust pass under the trust's own terms.
• Incapacity. A replacement trustee can manage trust assets if you lose capacity, alongside your enduring power of attorney for everything else.

Against those benefits, weigh the cost of setting up and running a trust, the yearly filings, possible property transfer tax and the loss of simplicity. For a modest estate, or one that already passes mostly outside probate, a carefully drafted will may be enough.

Reducing probate fees in BC: what works and what backfires compares the options, and adding an adult child to your home's title explains why one common shortcut can cause problems. If your question is mainly about your home, see transfer-on-death deeds don't exist in BC.

Wondering whether a trust fits your plan? Get advice before you transfer anything

Our wills and estate planning lawyers can review your assets, your will and your goals, explain whether a trust is likely to help or whether a simpler plan will do, and prepare the documents you need.

Call 604-259-2844 or send us a message to arrange a consultation at our Vancouver office.