Trust Cannot Be Amended Unless Expressly Allowed

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POWER TO AMEND a TRUST Is Limited the Legal Ability to do so only when it is expressly allowed for in the trust deed.

 

The creation of a trust is fundamentally a conveyance of property.

This conveyance cannot be altered or amended unless an express power has been reserved to that effect (Re Paradise Motor Co.,[1968] 2 All E.R. 625 (C.A.)) or there are powers of advancement or resettlement.

In the absence of such powers, the ability to vary the terms of a trust is highly constrained. At common law, such an amend­ment could be effected if the conditions of Saunders v. Vautier (1841), 41 E.R. 482 (Ch.D.) are met; that is, the beneficiaries are all sui juris and among them they represent the totality of the beneficial interest. This common-law rule has been abolished in Alberta and Manitoba, where court approval is required.

In British Columbia, the rule con­tinues, and where there are minor or unascertained beneficiaries, variation can be sought under the Trust and Settlement Variation Act, R.S.B.C. 1996, c. 463.

Where a power to amend is to be included in the trust deed, it should be framed in broad terms. Certain restrictions might be imposed, for example, ensuring that no amendment alters the powers of certain ower-holders (such as the protector), the identity of certain benefi­ciaries or their respective entitlements. This restriction is particularly important to include when creating spousal trusts, alter ego trusts, or joint spousal or common-law partner trusts under the TTA (which have very confined rules concerning beneficial entitlement), or the amend­ing clause itself.

Typically the power to amend is vested with the trustee, who may be required to seek prior protector approval if a . protector has been appointed.

Trevor Todd

Trevor Todd is one of the province’s most esteemed estate litigation lawyers. He has spent more than 40 years helping the disinherited contest wills and transfers – and win. From his Kerrisdale office, which looks more like an eclectic art gallery than a lawyer’s office, Trevor empowers claimants and restores dignity to families across BC. He is a mentor to young entrepreneurs and an art buff who supports starving artists the world over. He has an eye for talent and a heart for giving back.

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