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25 Est.Tr. & Pensions J 329 (2005-2006)
The Percentage Trust: Uniting the Objectives of the Life Tenant and Remainderperson in Total Return Investing by Trustees

handle is hein.journals/espjrl25 and id is 357 raw text is: THE PERCENTAGE TRUST: UNITING THE OBJECTIVES OF THE LIFE TENANT AND REMAINDERPERSON IN TOTAL RETURN INVESTING BY TRUSTEES Anne Werker Percentage trusts are not new. The Ontario Law Reform Commission discussed the percentage trust in their Report on the Law of Trusts published in 1984.' Upon reading the Stillman case,' the writer of this article wondered why percentage trusts are not used more often today, not only when property is held for charitable purposes in perpetuity, but for personal trusts. The Stillnan case, the reader may recall, was an application for approval of a scheme for the administration of a charitable trust. The applicant charities wished the court to authorize the adoption a 'total return- investment and distribution policy. The problem was that the Trustees could not meet the disbursement quota applicable to private charitable foundations under the Income Tax Act due to the investment restrictions in the will. As a result, the Stillman Trust faced deregistra- tion as a charity and liability for the consequent taxes. Although the court could have merely allowed for an encroachment on capital to solve the problem. relying on the court's cv pros jurisdiction, Cullity J. ordered a fundamental change to how the charities' entitlements were to be calculated on an ongoing basis: Instead of making payments of net income (and not capital), distributions were to be made without regard to whether their source was income or capital. according to an appropriate distribution rate. The Stillman Trust was converted into a percentage trust. There are a number of articles about percentage trusts in the U.S. journals. Percentage trusts have been studied by man) law reform * Of Smith & Werker and Hull & Hull LLP. 1. Ontario Law Reform Commission, Report on the Law of Trusts (1984). Volume 1, pp. 301-4. 2. Toronto Aged Men's And Women's Homes v. Loyal True Blue and Orange Home (2003). 68 O.R. (3d) 777. 5 E.T.R. (3d) 260 sub norn. Stillman Estate (Re) (S.C.J.). concerning a charitable trust created under the will of Mary Elsworth Stillman.

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