Solicitor’s Tip – April 2025
Last month, our Solicitor’s Tip focused on general considerations related to including a power of appointment in a will, a tool that can be used to authorize third parties to decide who will receive estate assets.[1] This month’s Solicitor’s Tip addresses a related point – using a will to grant a power of appointment specifically to estate trustees[2] – and explores issues which drafting solicitors may want to consider when preparing wills including such powers of appointment.
Creating a Power of Appointment Rather Than a Trust
A power of appointment may be created in a will expressly or implicitly – as noted by the Nova Scotia Supreme Court, “[n]o technical or express words are necessary … so long as the intention is sufficiently clear.”[3] Depending on how the will is drafted, however, there may be some confusion as to whether a power of appointment was intended, or a trust.[4] This particular issue appears to arise when a will authorizes the executor of the estate to choose how to distribute estate property.[5]
Simply stating that a power of appointment is intended may not prevent this issue from arising after the testator has passed away. The case law demonstrates that the court’s determination of the testator’s intentions may not simply turn on the language used in a will. For instance, a will clause referring to a trust has been interpreted as establishing a power of appointment,[6] and conversely, the court has held that a clause referring to a power of appointment was intended to create a trust. This latter scenario occurred in Guglick Estate, a case where the will gave the testator’s property to the executors “upon the following trusts,” one of which stated that the “executors shall have the power of appointment with regard to my farm lands and … shall be allowed to transfer the lands or sell the farm lands and to disperse the funds as they deem appropriate.”[7] Even though the will stated that the executors had a power of appointment, the court found that the overall wording of the will indicated an intention to create a trust.[8]
Should a client wish to include a power of appointment in their will and give the power to an estate trustee to exercise, a few drafting strategies may help make it apparent that a power of appointment is intended rather than a trust:
- The will should not indicate that the power of appointment is established on a trust;
- If the power of appointment is included in a subclause in the will, that subclause should not be part of a list of trusts; and
- If the client wants to establish both a power of appointment in their will plus one or more trusts, the power of appointment and the trust(s) should not be addressed in the same will clause.
Stating the Capacity in Which the Estate Trustee Is Given the Power
If a power of appointment authorizes an estate trustee to determine how to distribute estate property, the will should also address whether the estate trustee is given the power in a personal capacity or as a fiduciary. The difference between the two merits discussion, as the capacity in which the estate trustee exercises the power can be quite significant if the estate trustee renounces, is unable to act, or predeceases the testator. Under such circumstances, if the power is to be exercised by the estate trustee as a fiduciary, whoever ultimately fills the role may become authorized to exercise the power of appointment, as “the power is normally construed as being given to the fiduciary virtute officii and whomever holds the office may exercise the power.”[9] If the power is instead given to the estate trustee in their personal capacity, it may simply lapse if the estate trustee predeceases the testator.
If the capacity in which an estate trustee may exercise the power of appointment is not expressly addressed in a will, the court may infer that the power was given to the estate trustee as a fiduciary. Such an inference seems particularly probable if the will refers to the estate trustee by their office rather than by their given name, authorizing the estate trustee to determine how to distribute the estate property. If such an inference is made, it may also support the conclusion that the testator intended to create a trust rather than a power of appointment, as the court may refuse “to accept that the testator intended that a wholly new executor would have the general power of appointment with discretion to, for example, designate themselves a beneficiary under the will.”[10]
If a client chooses to appoint more than one estate trustee, and wants them to exercise a power of appointment as fiduciaries, it is also advisable to include a dispute resolution mechanism in the will that addresses how they are to proceed if they are unable to agree as to how to exercise the power of appointment.[11] Without such a clause, the estate trustees will be required to make all decisions jointly,[12] including decisions as to how to exercise the power of appointment.[13] Failing to address how to handle disagreements amongst the estate trustees when distributing the property could also support the conclusion that a trust was intended rather than a power of appointment.[14]
Conclusion
Should a client wish to include a power of appointment in their will and authorize their estate trustee to exercise it, it is important to draft the will with care in light of the risk that the will may be interpreted as creating a trust rather than a power of appointment. Following the tips discussed above, however, ought to help minimize the risk. When in doubt, a will ought to expressly state that a power of appointment is intended, and any will clause that refers to a power of appointment should not refer to any trusts. The will should also state the capacity in which the estate trustee is being given the power of appointment.
[1] See Suzana Popovic-Montag, “Solicitor’s Tip: Including a Power of Appointment in a Will” (3 March 2025), online (blog): Hull & Hull <https://hullandhull.com/2025/03/solicitors-tip-including-a-power-of-appointment-in-a-will/>.
[2] Testators have granted a power of appointment to the executors of their estates in a number of cases: see Tassone v Pearson, 2012 BCSC 1262; Re Beatty’s Will Trusts Hinves v. Brooke,[1990] 3 All ER 844 (ChD); Re McEwen, McEwen v. Day, [1955] NZLR 575 (NZSC); Re Hayes, 1938 CanLII 340 (Ont SC), aff’d 1983 CarswellOnt 238 (CA); Higginson v Kerr (1898), 30 OR 62 (Ont HC) [Higginson].
[3] Ferguson Estate v MacLean, 2001 NSSC 154 [Ferguson] at para 1, quoting Halsbury’s Laws of England, vol. 36 (2), 4th ed reissue (London: Butterworths, 1999) at 133, para 219.
[4] As noted by Justice Huband in Jankowski v Pelek Estate, 1995 CanLII 11066 (Man CA) at para 17, such a will clause can be “intended as a power or a trust, but it cannot be both.”
[5] See, for example, Daniels v Daniels Estate, 1991 CanLII 6555, 1991 ABCA 288 [Daniels]; Ferguson, supra note 3; Lubberts Estate, 2014 ABCA 216; Guglick Estate (Re), 2020 ABQB 561 [Guglick].
[6] See Higginson, supra note 2, as discussed in Ferguson, supra note 3 at paras 4-6.
[7] Guglick, supra note 5at para 7.
[8] Ibid at para 14.
[9] See Albert H. Oosterhoff, Robert Chambers and Mitchell McInnes, Oosterhoff on Trusts, 9th ed (Toronto: Thomson Reuters, 2019) at 146.
[10] Guglick, supra note 5 at para 14.
[11] Alternatively, a will clause could permit the division of the property to be distributed by the estate trustees, in the event that they wish to distribute the property to more than one entity, including to themselves: see Daniels, supra note 5 at para 14.
[12] See Suzana Popovic-Montag, “Will Drafting Tips for the Appointment of Multiple Estate Trustees: Handling Disagreements During an Estate Administration” (3 March 2023), online (Solicitor’s Tip): Hull & Hull LLP Knowledge <https://hullandhull.com/app/uploads/2023/03/Solicitors-Tip-March-2023.pdf>.
[13] See Fenton v Nevin (1893), 31 LR Ir 478 at 486, quoted in Daniels, supra note 5 at para 14.
[14] See Guglick, supra note 5 at paras 15-19.