A Trustee's Record-Keeping Obligations in Ontario

Being trustee of a family trust is often less glamorous than it sounds — behind the investment decisions and distributions is a steady obligation to document everything, every year, for as long as the trust exists. Ontario's trustee record-keeping obligations are not an optional best practice; they are part of the fiduciary duty a trustee owes to the trust's beneficiaries, and poor records can become a serious problem the moment anyone questions how the trust has been managed.

This article sets out, practically, what a trustee should be keeping track of and why it matters.

Why Record-Keeping Is a Legal Duty, Not Just Good Practice

A trustee is a fiduciary: someone legally obligated to act in the best interests of the trust and its beneficiaries, keep trust property separate from their own, and be ready to account for what they have done with it. Beneficiaries generally have a right to ask a trustee to formally account for the trust's administration, and a trustee who cannot produce clear records is in a much weaker position when that request comes — whether it comes as a simple question or a formal court application.

What a Trustee Should Be Keeping Track Of

Financial Records

• [ ] Bank and investment account statements for every account the trust holds
• [ ] Records of every deposit into the trust, including its source
• [ ] Records of every payment or distribution out of the trust, including who received it and why
• [ ] Investment transaction records — purchases, sales, and the reasoning behind significant decisions
• [ ] Receipts and invoices supporting any expense paid from trust funds
• [ ] Records of any fees or compensation the trustee has taken

Administrative Records

• [ ] A copy of the trust document itself, and any amendments to it
• [ ] Correspondence with beneficiaries, especially anything touching on distributions or disputes
• [ ] Tax filings made on behalf of the trust
• [ ] Valuations obtained for any significant trust asset
• [ ] Minutes or notes of significant trustee decisions, especially where the trustee exercised discretion

How Long Should Records Be Kept?

A trustee should generally retain records for as long as they could reasonably be needed — which, for an ongoing trust, usually means for the life of the trust and for a further period afterward, to cover the possibility of a review or challenge after the trust winds up. Because the appropriate retention period depends on the type of trust, its tax filings, and the circumstances, a trustee should confirm specific retention timelines with a lawyer or accountant rather than guess.

What Happens When Records Are Incomplete

When a trustee cannot produce adequate records, the consequences generally include:

1. Difficulty passing accounts. A court reviewing a trustee's accounting expects clear, supportable figures — gaps invite scrutiny and can lead to a court resolving ambiguities against the trustee.
2. Personal liability exposure. Where a trustee cannot show a transaction was proper, they may be required to personally make good any shortfall the court cannot otherwise account for.
3. Loss of beneficiary trust. Even where nothing improper actually occurred, poor documentation damages the relationship between trustee and beneficiaries and often triggers exactly the kind of dispute good records would have prevented.
4. Slower, costlier administration. Reconstructing years of financial activity after the fact — often without full information — is far more expensive than keeping organized records as you go.

Practical Habits That Make This Manageable

• Keep the trust's finances in a dedicated bank and investment account, never mixed with personal funds
• Reconcile the trust's records on a regular schedule rather than only when asked
• Retain digital and physical backups of key documents
• Note the reasoning behind significant decisions at the time you make them, not months later from memory
• Consider engaging a bookkeeper or accountant for a trust with meaningful transaction volume

Frequently asked questions