Informal trust account

Informal trust accounts are the ideal vehicle for investing on someone else’s behalf. Similar to standard margin accounts, informal trusts can be opened in the name of one, two, or three holders, but are held for the benefit of another person (usually a minor).

What’s the difference between standard, informal, and formal trust accounts?

All of these account types are classified as margin accounts. Investments can be made in stocks, options, physical gold, ETFs, mutual funds, bonds, GICs, exempt market products, forex, and CFDs. The difference lies in ownership and legal documentation.

  • A standard account is typically opened by an individual who trades on his or her own behalf.
  • An informal trust is typically opened by an adult on behalf of another person, usually a minor. Compared to a formal trust, there is less legal documentation required to open an informal trust, but it may be treated differently under the law.
  • Like an informal trust, a formal trust is typically opened by an adult on behalf of a minor. However, there are additional formal (legal) documents required when opening the account to ensure that any specific account instructions are legally binding.

Can there be multiple holders on an informal trust account?

Yes. If you want to open an informal trust account with two or more holders, open a joint informal trust. This account works just the same as a standard informal trust account, except that it has multiple traders.

Is a trust agreement required for an informal trust?

No. Informal trusts do not require a trust agreement.

What can I trade in an informal trust?

You can trade just about everything.

In an informal trust equities margin account, you can trade stocks (including OTC penny stocks), options (standard and mini), ETFs, mutual funds, bonds, term deposits, GICs, exempt market products, and physical gold.

In an FX and CFD account, you can trade forex and contracts-for-difference.