By Nizam Shajani, CPA, CA, MBA
November 16, 2020
Trustees should be selected carefully as the trust deed may give them significant administrative powers to manage the trust property. This includes the power to:
o Sell trust property;
o Postpone the sale of trust property;
o Lease land;
o Grant options to purchase or to renew a lease of land;
o Repair and make improvement to real property;
o Insure trust property;
o Issue receipts;
o Settle debts;
o Employ agents;
o Obtain a passing of accounts; and
Dispositive powers also give trustees a discretion in the distribution of income or capital to beneficiaries. The trustee may apply income or capital for the maintenance or education of one or more beneficiaries; make a payment out of capital in favour of a capital beneficiary before the time he or she is to receive the capital; and make an appointment to choose amount a class of beneficiaries is to receive a distribution of income or capital.
Statutory powers are default powers because the trustee acts typically provide that power applies unless the trust instrument indicates otherwise. Statutory powers are also limited powers (necessary for the administration of a trust) because a more extensive set of powers would require a drafter to specifically exclude certain powers.
Powers are often included in a trust instrument even when there is a corresponding statutorily implied power. The approach one should take to determining what powers a trustee has is to carefully read the words in the trust instrument to determine just what the scope of a particular power is. If you are uncertain, seek professional advice.
The exercise of powers by a trustee can be challenged in court, normally by one or more beneficiaries. The basis of intervention may include a trustee failed to act impartially, in bad faith, contrary to public policy or failed to exercise discretion.
This information is for discussion purposes only and should not be considered professional advice. There is no guarantee or warrant of information on this site and it should be noted that rules and laws change regularly. You should consult a professional before considering implementing or taking any action based on information on this site. Call our team for a consultation before taking any action. © 2020 Shajani LLP