Understanding the Basics:
A trust is a legal arrangement in which a person or organization transfers ownership of assets to a trustee, who manages them for the benefit of a third party. While there are different types of trusts, all valid trusts share three core elements: (1) a clear intention to create the trust; (2) a clearly defined description of the property involved; and (3) clearly identified beneficiaries. If any of these elements are missing, unintended complications can arise.
What Is a Purpose Trust?
As with many legal principles, there are exceptions. One such exception is the purpose trust. A purpose trust is established for a specific, defined purpose and does not have beneficiaries. Instead of benefiting specific individuals, it is created to achieve certain objectives, which do not have to be charitable (note: charitable trusts will be discussed later in this series).
Re RM Plasterer Education Trust, 2025 BCSC 1204
In a recent B.C. decision, a grandmother established a trust to support the educational pursuits of her grandchildren and great-grandchildren. She expressed to her trustees her desire to help future generations access education by covering program costs, but not additional expenses—unless those costs would prevent attendance due to financial hardship. However, the trust’s wording was ambiguous, requiring the court’s interpretation as to what constituted “approved costs.” The court put themselves in the grandmother’s shoes, aiming to reflect the grandmother’s intentions and assessed which educational expenses she intended to cover when she created the trust.
Takeaways:
First, purpose trusts are valuable tools, but clarity and specificity are essential to ensure they function as intended. This gives trustees the confidence to follow directions even after the individual is no longer there to correct them. Second, in RM Plasterer Education Trust, the grandmother’s aim was to remove financial obstacles to provide educational opportunities for her descendants, but there were limits. This is why courts play a vital role in upholding these boundaries and ensure the trust’s benefits are distributed as intended.