CanadaWhat investment standards must a trust company follow when investing estate funds?
A trust company in Canada must invest estate funds strictly according to the terms of the trust instrument and applicable law, as required by the Trust and Loan Companies Act.
What the Law Says
The federal Trust and Loan Companies Act sets the baseline legal standard for how trust companies must handle investments made on behalf of estates and other fiduciary accounts.
Trust companies operating in Canada are federally regulated and must comply with the Trust and Loan Companies Act. When managing estate funds — which qualify as fiduciary assets — the company must follow both the specific instructions in the trust instrument (e.g., will or trust deed) and any relevant provincial or federal laws.
This dual obligation ensures that investments align with the settlor’s or testator’s intent while also meeting statutory safeguards for prudent management.
Statutory TextTrust company must invest fiduciary assets in accordance with the terms of the trust instrument and applicable law.
— Trust and Loan Companies Act, s. 413 — Investment standards
What to Do
Review the trust instrument (e.g., will or trust deed) for express investment directions or restrictions.
Confirm whether provincial trust legislation (e.g., Ontario’s Trustee Act) imposes additional duties, such as the 'prudent investor rule'.
Ensure all investments comply with the federal Trust and Loan Companies Act, s. 413.
Maintain clear records showing how each investment decision satisfied both the trust terms and applicable law.
Consult legal counsel if the trust instrument is silent or ambiguous on investment authority.
Sources
Not legal advice. This article is general information based on publicly available sources, written for educational purposes. Laws change and individual situations vary. Consult a licensed attorney in your jurisdiction before acting on anything you read here. Last reviewed: 2026-06-08.