Variations of Trust

Variations of Trust

A trustee of an inter vivos or testamentary trust is required to carry out his or her duties in accordance with the provisions of the trust document, applicable legislation and principles of common law. A trustee has no authority to vary the terms of a trust unless the trust document itself permits the trustee to vary the terms. A trustee who varies the terms of a trust without authority is in breach of trust and his or her fiduciary duties.

There are several methods of varying a trust. In the Province of Ontario, where all persons who are absolutely entitled to the trust assets have requisite capacity and are 18 years of age or older, agree, the trust can be varied or wound up. The court has the inherent jurisdiction to aid in the preservation of the trust and to support the administration of the trust assets by trustees. Variations are possible in certain cases involving charitable matters pursuant to section 13 of the Charities Accounting Act, without application to the court. However, where beneficiaries of a trust are not able to provide consent to a variation or termination of a trust themselves, as a result of minority, or other legal disability, the court may approve a variation of the trust on behalf of the minor or person under legal disability. The court will only vary the trust in accordance with the Variations of Trusts Act where there is a benefit to all persons on whose behalf the court is being asked to provide consent.

In Ontario, The Children's Lawyer represents the interests of minors and unborn potential beneficiaries of a trust. A variation requires the support or non-opposition of The Children's Lawyer. Generally, a draft deed of arrangement varying the trust is submitted to The Children's Lawyer for approval before the application is commenced. Once the requirements of The Children's Lawyer have been satisfactorily addressed, a deed of arrangement is entered into by all capable adult beneficiaries. The deed of arrangement provides that it shall only become effective upon being approved by court order. The application is accompanied by a supporting affidavit. The affidavit must summarize all of the relevant facts and set out in what manner the arrangement is for the benefit of the class of beneficiaries on whose behalf the court is being asked to approve the variation.