Trustee Must Follow Terms of the Trust

Firing squadIt is trite law that a trustee is obliged to follow the terms of a trust and has no discretion to deviate from the trust’s  terms.

In McLeod v McLeod BCSC 2014, Butler J. found an executor  to have breached the terms of a trust by not putting the proceeds of the house sale proceeds into two separate accounts for the grandchildren beneficiaries, and instead used the monies for other purposes. She failed to even obtain the consent of the grandchildren to sue their monies for other purposes.

The trustee is obliged to follow the terms of the trust. The principle is so basic that it does not need authority; however, it is described succinctly in Merrill Petroleum Ltd. v. Seaboard Oil Co. (1957), 22 W.W.R. 529 at 557 (Alta. S.C):

… While it is also true that there are certain general obligations imposed by law on any trustee (e.g.. the duty not to profit from the trust at the expense of the beneficiaries) the more specific obligations and duties of a trustee are set forth in the instrument creating the trust – in other words, except for those general duties imposed by law on all trustees, the terms of a trust are to be found within the four comers of the trust instrument…. In other words, the first duty of this trustee (as of all trustees) was to follow implicitly the terms of the trust instrument, and, secondly, to observe those general principles of trustee law which did not run counter to the express terms of the trust.

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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