The Variation of Trusts Act might be the shortest statute that I am aware of, with the entire statute likely containing fewer words than the current blog. At its most basic the Act provides the court with the authority to approve a proposed variation of a trust on behalf of a minor or incapable beneficiary, with the only condition being the court must be of the belief the implementation of the variation is for the “benefit” of the person on whose behalf they are approving the variation. But what exactly does “benefit” mean?

When most people think about a proposed variation of a trust needing to be for the “benefit” of the minor or incapable person for the court to approve it they likely think about there needing to be some direct financial benefit for the minor or incapable beneficiary. Although a direct financial benefit is likely the most common circumstance, with funds often being directed to be paid into court for the benefit of the minor/incapable beneficiary as part of the proposed variation, a financial benefit is not the only “benefit” the court will consider, as cases like Re Zekelman, [1971] 3 O.R. 156 (ONSC), note the term “benefit” is to be liberally interpreted and is not confined to financial benefit.

An interesting example of the court’s more unique application of what constitutes a “benefit” can be found in N.S. (Re), 2007 NSSC 288. In N.S. (Re), the Trustees sought to vary the terms of two testamentary trusts to delay the final payment to the beneficiaries by six years, in effect arguing the beneficiaries were too young to receive the assets of the trust as originally drafted. The terms of the trust as originally drafted would have resulted in the then minor beneficiaries receiving all assets in the trust upon turning 19 years of age. The Trustees believed this was too young an age, requesting the court vary the trusts to delay the payment until they were 25 years of age.

Like Ontario, the Nova Scotia version of the Variation of Trusts Act also requires there to be a “benefit” to the beneficiary on whose behalf the court is approving the variation. The court ultimately agreed with the Trustees that delaying the payment from age 19 to 25 would have a “benefit” to the then minor beneficiaries, stating:

“These trust funds, which are presently valued in excess of one million dollars each, should appreciate significantly in value between now and the date that each child attains the age of majority.  Under the proposed variation, each beneficiary will become a co-trustee of his or her respective trust upon attaining the age of 19.  Delaying the capital distribution of each fund for six years will afford each beneficiary an opportunity, once they have become an adult, to learn and acquire the skills that are necessary to manage an inheritance of this magnitude.  This, in my view, is very much to their benefit.”

Thank you for reading.