One would be forgiven if at first instance they did not see any connection between Justin Trudeau’s recent selection of his cabinet and trust law. While most of the attention has been placed on the background of the new appointees, and of their immediate tasks at hand, there is a (however small) connection to the trust world, as many of the newly appointed Ministers and their staff are rushing to place their assets into blind trusts.
At its most simple, a blind trust can be thought of an individual relinquishing control over their assets, and providing them to a trustee to manage them on their behalf. The trustee has complete discretion over how to invest the individual’s assets, with the beneficiary being provided with no information regarding how the investments are being held, and the beneficiary having no say in how the funds are managed. As the beneficiary has no idea what their funds are invested in, the theory is that they would not be inclined to enact government policy which would favour their own investments, and that they would be able to avoid a conflict of interest.
In accordance with the federal Conflict of Interest Act, a “reporting public office holder”, which is defined as including a Minister of the Crown, a “ministerial adviser”, as well as a member of the “ministerial staff” who works on average 15 hours or more a week, must within 120 days of their appointment either sell all “controlled assets” in an arm’s length transaction, or place such assets into a blind trust. Any assets which are placed into a blind trust have annual reporting requirements, with the trustee having to file an annual report to the Conflict of Interest and Ethics Commissioner regarding the ongoing management of the blind trust.
In the context of the recent federal election, the most attention was placed on the recently elected Toronto Centre MP, Bill Morneau, who was appointed as Minister of Finance. As Mr. Morneau himself reportedly has a stock portfolio in excess of $30 million, and with his appointment as Minister of Finance would have a significant influence and impact upon the financial sector, some attention was paid to the transition of his investment portfolio likely into a blind trust. Justin Trudeau himself previously moved his own investments into a blind trust following his appointment as leader of the Liberal Party in 2013.
Tomorrow is July 1st. It makes me think of Hatley, a small village in Quebec’s Eastern Townships and its annual Canada Day Celebration. (My wife grew up nearby.) Across Canada, flags fly high and memories abound.
If you will allow this segue, memories are often a significant part of estates that are easily overlooked. When an estate arises, we often focus on assets without putting our mind to the deceased’s legacy. For many of us, our papers and personal files do not amount to much. But it’s a different story for politicians.
An interesting paper from the Faculty of Information Quarterly at the University of Toronto compares the treatment of Presidents’ papers versus Prime Ministers’ papers. The retention of U.S. papers seems to be more statute driven, although presidential Executive Order can govern the ultimate treatment of documents.
Apparently, on his first day on the job, President Obama overturned President Bush’s order that had limited access to presidential papers.
In Canada, Prime Ministers’ papers fall into two categories: government/institutional records and personal/political records. Former Prime Ministers receive tax credits for the value of the personal papers they donate to Library and Archives Canada. That value is not disclosed.
Similarly, in the U.S., some financial incentives exist for Presidents: in 2000, the Justice Department paid the Nixon estate $18 million to compensate for records seized in 1974.
In both cases, restrictions regarding the release of certain documents might apply. For example, apparently here in Canada, for 2.5 million records in the National Archives, one must write to Mr. Mulroney directly for permission.
Have a safe, relaxing Canada Day.