You put your daughter’s name on the house title to skip probate but here’s what you created.
Evelyn is 74. Her husband died in 2017, and the spring after that, a friend at her church told her about something that family had done. “Put your daughter’s name on the house title now”, the friend said. “When you’re gone, the house just goes to her. No court, no probate, no fuss”.
So Evelyn did it. She and her daughter Colette went into a lawyer’s office, signed a transfer, paid a few hundred dollars, and never thought about it again. Nobody asked whether Colette was receiving half a house that afternoon or simply having her name added to a piece of paper. It never came up, because the whole point was to keep things simple.
Eight years on, that arrangement has a name Evelyn has never heard, and possibly a filing deadline attached to it.
What a bare trust actually is
I want to spend a minute on this, because the word trust intimidates most people. They hear it and picture a complex document, a trust company, somebody’s grandchildren receiving money at 25. That’s a trust somebody set up deliberately.
A trust is really just a situation where the person whose name is on something isn’t the person who really owns it. There’s legal ownership, meaning whose name appears on the title or the account. And there’s beneficial ownership, meaning who the thing actually belongs to, who pays for it, who gets the money if it’s sold. Usually, both belong to the same person. Your name is on your house and the house is yours, so there’s nothing to separate. A trust is what exists when the two split, meaning one person’s name is on the paperwork while somebody else is the real owner, whether or not anyone ever used those words.
A bare trust is the simplest version. The person holding legal title has no job to do and no decisions to make. They can’t sell the property, borrow against it or rent it out on their own and can only do what the real owner directs. They’re holding a name on a title, and that’s the whole thing. You don’t need a document to create one and you don’t need to intend to create one. If your name goes on your mother’s house and the house is still hers in every practical sense, the arrangement could exist from that moment.
For income tax purposes a bare trust has generally been treated as though it isn’t there, which is why so many have gone unexamined for years. Nothing ever showed up to remind anybody they existed.
So what did Evelyn create?
Either she gave her daughter half a house that day, which is a gift, and gifts of real property carry tax consequences. Or she kept the house, went on living in it, paying the taxes and insuring it, and Colette’s name means nothing while her mother is alive. If it’s the second one, that’s a bare trust and Colette is the trustee.
Plenty of people have created the second thing while believing they did the first. Because it gets handled as a short transfer between people who trust each other, there’s usually nothing in writing that settles this question. The question sits there for years because nothing forces an answer. Then Evelyn needs to sell, or she dies, or the CRA asks, and somebody has to answer it.
Now it’s mandatory
Canada brought in expanded trust reporting for year ends starting December 31, 2023. Bare trusts got caught in it, and the definition was broad enough to pull in a huge number of ordinary family arrangements the rules were never built to catch. Days before that first deadline the CRA backed off. It backed off again for 2024, and again for 2025. Three deferrals in three years is a good reason why most Canadians concluded the whole thing had gone away.
It hasn’t. Bill C-15 received Royal Assent on March 26, 2026, and certain bare trusts have to file a T3 return for tax years ending on or after December 31, 2026. Bare trusts run on a calendar year and the return is due 90 days after year end, so the first real deadline is March 31, 2027. Filing late costs $25 a day with a $100 minimum fee, up to $2,500, even when no tax is owing and no money has changed hands, and a knowing or grossly negligent failure costs considerably more.
The exemptions, and which one is likely to matter to you
The small trust exemption has been written about a great deal, and it deserves clarification. It exempts arrangements holding $50,000 or less throughout the year, and the improvement is that it no longer restricts what kinds of assets qualify. If you added an adult child to a modest bank account, that’s very likely the rule that covers you. It will do nothing for you if the asset is a house.
The one that likely covers Evelyn is different. Where all the legal owners are related individuals, and the property is real property that could be designated the principal residence of at least one of those owners, the arrangement is exempt from filing. Evelyn and Colette are mother and daughter, and Evelyn lives in the house. On those facts there’s no T3 to file. That exemption is based on the principal residence part, though, so if the property is a rental, a vacation property or a duplex, the answer changes.
The one that catches people: Raymond added his son to his chequing account in 2022 so somebody could pay the bills if he ended up in hospital. The balance normally sits around $12,000, comfortably inside the small trust exemption. Then in November he sold his condo, and the proceeds landed in that account while he waited to close on his apartment. For about six weeks the account held $340,000. The exemption requires the value to stay at or below $50,000 throughout the whole year, and it didn’t. There’s a second exception at $250,000 for related individuals holding cash and similar assets, and Raymond’s deposit broke that one too. One deposit into one account, and an arrangement Raymond set up for a hospital stay has become a reportable trust.
Step back and look at the whole thing
If you’ve figured out that you’re exempt from filing, it’s tempting to stop reading. I’d rather you didn’t, because the filing question is only one aspect about the potential complications with these arrangements.
If you’re recognizing your own situation here, what’s on your house title is just one piece of something bigger, and it’s rarely the only piece that gets decided informally. Estate Architect™ is a self-paced planning tool covering the full scope of an estate plan, with guidance specific to your province or territory, including probate fees where you live, deemed disposition on your final return and how real estate sits in your estate. It’s built to be used before you sit down with a lawyer or an accountant, so you arrive knowing what to ask.
Was it worth doing in the first place?
Start with what the arrangement was supposed to save you, because that varies enormously by where you live. In Alberta, probate fees are capped at $525 no matter how large the estate is. In Ontario the estate administration tax runs $15 per $1,000 above the first $50,000, so a $700,000 estate pays roughly $9,750, and British Columbia is close behind. In Quebec a notarial will doesn’t need probating at all, and the civil law there has no joint tenancy with right of survivorship for immovable property, so adding a name to title doesn’t do what people believe it does. The territories each have their own schedules. A lot of people took on permanent complications to avoid a cost that in their province came to a few hundred dollars.
There’s also what the arrangement exposes you to while it lasts. Colette’s name on the title means the house can be drawn into Colette’s divorce, her bankruptcy, or a judgment against her. As trustee of the bare trust, the burden would fall on Colette to prove she only has legal title. And there’s a tax question that returns later. If beneficial ownership of half the house actually moved in 2018, Evelyn had a deemed disposition at fair market value that year. Her own principal residence exemption would have sheltered the gain to that point, but Colette’s half has been accruing gains ever since. If Colette owns her own home, her principal residence exemption may not shelter that half when the property sells.
Your executor is the one who has to answer this
In the common law jurisdictions, when a parent transfers property to an independent adult child and gets nothing in return, the law starts from the assumption that the child is holding it for the parent rather than receiving a gift. That’s the presumption of resulting trust, confirmed by the Supreme Court in Pecore v. Pecore. It can be rebutted with evidence a gift was intended, but somebody has to go and find that evidence, and that somebody is often your executor.
If Evelyn dies without any record of what she meant, Colette will say the house is hers because that was the plan she was told about. Her brothers will say it belongs to the estate and gets divided three ways, the way the will says. Neither party will be able to prove it, and the estate will pay two sets of lawyers to argue about a house that went into joint names to keep things simple.
What to do about it
Find out which arrangement you actually have. Not what you meant at the time, but what the documents say now. Then put your intention in writing somewhere your executor will find it and a court would take seriously, whether that’s a declaration of trust, a signed letter kept with the will, or a correction to the title.
Ask your accountant whether an exemption applies to you for the 2026 tax year and ask before December rather than in March with three weeks left before the filing deadline. Where you’re relying on an exemption, keep the documents that show why, because the CRA is entitled to ask.
Then ask whether the arrangement still makes sense. The daughter who was single in 2018 is married now with a business of her own. The house is worth three times what it was. The reason it was set up may not have survived the years since.
Evelyn made a decision on a Sunday morning based on advice from somebody who meant well, and there’s nothing foolish in that. The arrangement did what she was told it would do. Nobody mentioned it would also do four or five other things, and those are the ones that turn up eight years later, usually on somebody else’s desk. Find out what you signed while you’re still the person who can explain it.
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Disclaimer: This content is for general information only and is not legal, financial, medical, or tax advice.
