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Insuring trust beneficiaries: how it works

CDIC coverage is free and automatic – depositors do not have to sign up to receive protection. Eligible deposits are protected up to $100,000 per deposit insurance category. Eligible deposits include savings accounts, chequing accounts, GICs or other term deposits, money orders, certified cheques, and bank drafts issued by CDIC members.

CDIC protects deposits held in trust separately from deposits in other deposit insurance categories. CDIC’s protection for deposits held in trust applies to the trustee holding the deposit (i.e. the depositor) but the protection can extend to each beneficiary of the trust deposit if key information is disclosed by the trustee to the CDIC member institution. CDIC relies on the latest information disclosed on the records of the Member Institution to make an insurance determination.

Where no beneficiary information is provided on the records of the Member Institution, CDIC only protects up to $100,000 in the name of the trustee (the depositor).

However, if the correct information about the beneficiary is disclosed, CDIC can extend protection up to $100,000 per beneficiary of the deposit. The following examples show how CDIC can provide protection for each beneficiary.

Example 1: Partially Insured up to $200,000

Eileen deposits $250,000 in trust for her two grandchildren, Paul and Lynn, at a CDIC member institution. Eileen is the trustee, and Paul and Lynn are the beneficiaries. Paul and Lynn each have an equal interest (i.e. 50% each) in the deposit.

Eileen has met CDIC disclosure requirements for trustees.

CDIC Protection: In this case, the eligible deposit held in trust by Eileen is protected up to CDIC’s limit of $100,000 for each beneficiary. As Paul and Lynn hold an equal interest, CDIC can extend protection of $100,000 for Paul and $100,000 for Lynn. CDIC would therefore reimburse Eileen (as the trustee) $200,000 for the trust deposit. The final $50,000 in the deposit would not be insured by CDIC.

Example 2: Fully Insured for $230,000

Joe has deposits with a CDIC member institution. These include:

  • Deposit #1 (a trust deposit): a $180,000, three-year GIC in trust for his two children (Sam and Sue). Joe is the trustee and has met CDIC’s disclosure requirements. Joe has assigned Sam and Sue $90,000, of the deposit, each.
  • Deposit #2 (deposit in Joe’s name): $50,000 in a chequing account in Joe’s own name
  • Total deposit held by Joe: $230,000 ($180,000 + $50,000)

CDIC Protection

  • Total deposit insured by CDIC: $230,000
    • Because Joe met the disclosure requirements for Deposit #1, CDIC can extend coverage to each beneficiary of the deposit ($90,000 (Sam) + $90,000 (Sue) = $180,000)
    • Because Deposit #2 falls into a different deposit insurance category, Joe will receive $50,000 in protection for the deposit in his own name.

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