Estate Trustee Duties

December 15, 2015 Natalia R. Angelini Uncategorized Tags: , 0 Comments

If and when someone asks you to agree to be appointed an estate trustee of their estate, before answering it might help to consider the very high duties owed by an estate trustee as well as the consequences of failing to fulfill them.

Estate trustees are fiduciaries, with the duty to exercise the care, diligence and skill that a person of ordinary prudence would exercise in dealing with the property of another person.  They must show “vigilance, prudence and sagacity” (see Fales v. Canada Permanent Trust Co.).

What underlies all duties is the duty of loyalty, described as the duty to act honestly and in good faith, and to use their powers solely for the purposes for which they were granted (see Oosterhoff on Trusts: Text, Commentary and Materials, 8th ed.).  Section 27 of the Uniform Trustee Act (not yet adopted in Canada) describes the duty of loyalty as follows:

(1) A trustee must exercise the powers and perform the duties of the office of trustee solely in the interest of the objects of the trust.

(2) Without limiting subsection (1), a trustee must not knowingly permit a situation to arise (a) in which the trustee’s personal interest conflicts in any way with the trustee’s exercise of the powers or performance of the duties of the office of trustee, or (b) in which the trustee may derive any personal benefit or a benefit for any other person, except so far as the law or the trust instrument expressly permits.

Other duties that flow from the duty of care and the duty of loyalty include the prudent investor rule (to properly invest the estate assets), the even-hand rule (to act impartially among the beneficiaries), the duty of transparency (to provide information to the beneficiaries), and the duty to account.

Given the seriousness of an estate trustee’s duties, and the fact that those who do not fulfill their duties are liable to the beneficiaries for all consequential losses, one should think carefully before taking on the job.

Thanks for reading,

Natalia Angelini

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