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17 LawNow 21 (1992-1993)
Miscellaneous Documents

handle is hein.journals/lanow17 and id is 21 raw text is: Powers of a trustee TERESA MITCHELL I was left some money by my uncle in his will. I was to inherit the money when I turned 25. I am now 33 and I haven't received the money. The trustee won't tell me when I will receive the money or where it is. What are the powers of a trustee? A trust is an arrangement by which property is transferred to one or more per- sons, called trustees, for the benefit of some other person or persons, called ben- eficiaries. There can be inter vivos trusts, or those which transfer property while the original owner is alive, and testamen- tary trusts, those created by wills. Your uncle has created a testamentary trust. He is known as the testator; he has selected and named a trustee in his will; and you are the beneficiary. A trustee invests the funds and is obliged to pay the income and/or capital to the beneficiaries accord- ing to the terms of the trust, set out in the trust agreement or will. When a person agrees to act as a trus- tee, she or he is obliged to accept what is known as afiduciary duty, a duty to act with the highest integrity on behalf of the beneficiaries of the trust. A trustee has three specific obligations: she cannot del- egate the job to someone else; she cannot in any way profit personally from deal- ing with the trust property (other than being paid if the trust document says so); and she must act honestly and with a level of skill and care that would be expected of a reasonable person administering her own assets. A trustee will not be held responsible for a mistake in judgment she has made as long as she used reasonable discretion and acted in good faith. The terms of the trust itself, statute law, and in some cases, the courts deter- mine how trust funds may be invested. In Alberta, there is a law called the Trustees Act. It sets out the types of investments that a trustee may make such as securi- ties issued by the government of Canada or any Canadian province. There are strict requirements placed on investments in corporations. If in doubt about a possible investment, trustees may apply to the Court to obtain a ruling about its suitabil- ity. However, such a court ruling still does not remove the duty of a trustee to take reasonable and proper care when making investment decisions. When a will creates a trust for mi- nors, children under the age of 18, the trustee is under a legal obligation to in- vest the funds for the benefit of the mi- nor. When a trust for a minor is set up, it will stipulate the age at which the trust will end and the beneficiary will receive the gift. The age selected can vary. Your uncle selected the age of 25 in your case. Section 33 of the Trustees Act deals specifically with trusts for minors. It says that trustees may pay to the guardian of a minor the whole or any part of the in- come to which the minor is entitled for the maintenance and education of the mi- nor. Any income not paid out in this way is to be accumulated by the trustee and invested for the benefit of the minor. In addition, the trustee may apply to the Court of Queen's Bench of Alberta for permission to sell all or part of the trust property and pay the proceeds to the guardian for the minor's maintenance and education, if the income from the trust is not sufficient to meet these needs. A beneficiary such as yourself has a right to ask the trustee for full and accu- rate information about the trust property. The trustee must keep detailed records and produce them to the beneficiary upon request. A trust ends when the terms of the trust have been carried out. A leading text on trust law in Canada says...the natural end of the trust is the moment when the trustee has properly transferred to ben- eficiaries all the remaining trust property in his name and possession, and has had his final accounts passed. Since you are past the age of 25 stipulated in your un- cle's will, you should be entitled to re- ceive your inheritance. You should see a lawyer without delay to see what steps you should be taking to protect your in- terests. The law involving trusts, the rights and remedies of beneficiaries, and the li- ability of trustees is extremely compli- cated. You will need a lawyer's help to sort this out. Teresa Mitchell is associate editor of LawNow Sources: It's your Future: The Canadian Guide to Estate Planning; Arthur B. C. Drache; Toronto: McClelland& Stewart, Toronto, 1984. Introduction to the Canadian Law of Trusts; Beverley G. Smith; Toronto: Butterworth & Co. (Canada) Ltd., 1979. Law of Trusts in Canada, 2nd ed.; D. W. M. Waters; Toronto: The Carswell Com- pany Ltd, 1984. September 1992 LawNow 21 QUESTION & ANSWER

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