Along with my partners, Ian M. Hull, Suzana Popovic-Montag, Jonathon Kappy, Stuart Clark, and Doreen So, I have had the pleasure of spending the beginning of this year’s academic term teaching Trusts at Osgoode Hall Law School.

It has been fun to interact with engaged students, to revisit the basics of trust law, and to face the challenge of explaining what can be a complex and poorly-understood area of law in an accessible format.  This week’s blogs will revisit some of the basic trust law principles that we so frequently encounter and apply (often in less than basic ways) in an estates and trusts practice.

To assist in explaining how a trust works, I have found it helpful to refer to the example of a piggybank:

-the settlor puts the first coin in the piggybank and hands it over to the trustee for safekeeping;

-other assets may be added to the piggybank over time by the settlor or third parties;

-the trustee holds the piggybank and has control over when it is opened and, subject to the terms of the trust (whether oral or set out in a written trust deed), coins or other assets are distributed to the beneficiaries;

-the trustee themself does not have an interest in what they hold in the piggybank (unless they are also a beneficiary of the trust);

-once the settlor puts their coin into the piggybank (and absent an expressly reserved power of revocation), they can no longer have it back;

-similarly, the beneficiaries (again, subject to the terms of the trust) may not have any enforceable rights in the coin/other assets held in the piggybank until distributions are made and/or dependent on the manner in which the trustee may exercise their discretion;  

-over time, the trustee (or the court) may smash the piggy bank as part of the variation or winding up of the trust.

While it may not be perfect and suit all situations, I plan to return to the piggybank example throughout the term in an effort to keep the dynamics of a trust straightforward. I am also curious to continue exploring just how many trusts we encounter in our work may fit into this most basic model.

Thank you for reading,

Nick Esterbauer