In the pursuit to make the creation and management of trusts more efficient and to reduce the need for Court interference, the new Trustee Act (Bill 12) was given Royal Assent and has come into effect on February 1, 2023.
What is a Trust?
A trust is a legal document created by a person (settlor) to allow another person (trustee) to hold assets and administer them for the benefit of others (beneficiaries). There are two kinds of trust: A Testamentary Trust is are created when a person dies and such creation is set out in a person’s Last Will and Testament. If a trust is settled while a person is still alive, an Inter Vivos Trust is created.
What is a Trust Instrument?
According to the new Trustee Act, a trust instrument creates or vary a trust. It may come in the form of a deed, will, or other legal documents; an enactment other than the Trustee Act; or an oral declaration but does not include a judgment or any order of the court.
Why A New One?
The old Trustee Act predominantly focused on testamentary trusts in order to be consistent with the Estate Administration Act. The new Trustee Act offers a modernized framework of trusts and provides more clarity in terms of duties, responsibilities and powers of the trustees including the duty to provide annual financial information to qualified beneficiaries . Also, other relevant additions are the provisions on temporary appointment of trustees, resignation of the trustees, removal of the trustees by majority with notice, and the delegation of the trustee’s powers to an Attorney– all have been bases of actions in Court.
Note that the new Act applies in respect of a trust created before, on or after the date such section in the Act comes into force.
Beneficiary? Trustee? Or Contemplating of Creating a Trust?
As the new Trustee Act has articulated many responsibilities of the trustees more than that of the old Act, trustees must ensure that they are ready to comply with their responsibilities under the Trust and under the legislation when they accept their role as trustees. There is also a sense of transparency being advocated by the new Act, hence, Trustees must be open to disclosing information to qualified beneficiaries. Beneficiaries have increased rights to disclosure and provisions to remove trustees, among others. We therefor cannot stress the importance for trustees and beneficiaries to familiarize themselves with the new Act and obtain legal advice in order to guide each of them with their rights and responsibilities. Hendrix Law would be happy to assist you in this endeavor.