Earlier this year, the Government of Alberta announced the new Trustee Act, SA 2022, c T-8.1 (formerly Bill 12) which will come into force on February 1, 2023. For those appointed as a trustee, there are several new provisions to be aware of. The goal of the new Trustee Act is to make it more efficient to create and manage trusts while reducing the need for involved parties to go to Court.
Some noteworthy changes to the Trustee Act include, but are not limited to, the following:
Duties of the Trustee
The new Trustee Act specifically outlines the duties of a trustee. A trustee is required to act in good faith in accordance with the terms of the trust, the best interests of the objects of the trust, and the Trustee Act. When performing the above duties, the trustee must exercise the care, diligence, and skill that a person of ordinary prudence would exercise in dealing with the property of another person. This standard of care is in line with that required of a personal representative of an estate pursuant to the Estate Administration Act, SA 2014, c E-12.5.
The new Trustee Act further sets out that trustees of certain professions, occupations, or businesses may be subject to a higher standard of care due to their possession of a particular degree of skill. This would likely include lawyers, accountants and professional trustees, but depending on the situation, there may be other professions included as well.
Reporting to Beneficiaries
One of the duties of a trustee under the new Trustee Act is to provide regular reports to the beneficiaries and respond to any written requests from the beneficiaries for back up documentation. The objective of the reporting requirements is to promote transparency and ensure the duties of the trustee are being properly performed.
Compensation for Trustees
While trustees have long been entitled to a fair and reasonable allowance for performing the required duties, section 69 of new Trustee Act sets out a list of several factors which should be considered in determining the appropriate compensation. For clarity, the trust document can be drafted to include specific compensation for the trustee as well.
Removal or Temporary Appointment of a Trustee
The previous act did not have a clear process for the removal or temporary appointment of a trustee. The new Trustee Act sets out how a temporary trustee may be appointed if a trustee is temporarily unable to perform the required duties which does not require court intervention.
The new Trustee Act also sets out how a person may be removed entirely as trustee, which includes through written resolution by the majority of trustees where three of more trustees are appointed. Reasons for removal can include failing to exercise the trustee’s duties with proper care, failing to communicate with the beneficiaries, or refusing to act cooperatively with other trustees in a way that is detrimental to the administration of the trust.
Reduced Requirement for Court Attendances
While the option of going to Court for direction when issues arise will remain, in many cases, it will not be required. This results from the provisions related to trustees acting under the authority of the majority.
Acting as a trustee can be a daunting and stressful task. Should you require assistance in your role as trustee or if you have any questions as a beneficiary of a trust, we welcome you to contact one of our estate lawyers to discuss your particular situation.
By Erin Vanderveen
Note: This article provides general commentary and is in no way intended to replace the need to consult with a legal professional concerning the specific circumstances of your situation. This article should not be construed or relied upon as legal advice.