CETA-1 (3rd Ed) - Chap 02 - Trustees Personal Reps - For Posting

Chapter 2
Trustees, Personal Representatives, and

Substitute Decision-makers
Learning Objectives ............................................................................................................... 2-4

2.1 Introduction .............................................................................................................. 2-6
2.1.1 Quebec Only: Administration of the Property of Others .............................................. 2-6
2.2 Trustees .................................................................................................................... 2-8
2.2.1 Common Law Only: What Is a Trust? ......................................................................... 2-8
2.2.1.1 Definition .................................................................................................. 2-8
2.2.1.2 Three Essential Features of the Common Law Trust ................................ 2-8
2.2.1.3 A Trust Continues ..................................................................................... 2-9
2.2.1.4 A Trust Is Irrevocable ............................................................................. 2-10
2.2.1.5 A Settlor May Be a Trustee or a Beneficiary and/or Reserve Powers ..... 2-10
2.2.1.6 Who Can Be A Settlor or a Trustee? ...................................................... 2-10
2.2.1.7 The Quebec (Civil Code) Trust ............................................................... 2-11
2.2.1.8 Establishing a Trust Under the CCQ ....................................................... 2-11
2.2.2 Quebec Only: What Is a Trust? ................................................................................. 2-11
2.2.2.1 The Patrimony ........................................................................................ 2-12
2.2.2.2 Definition ................................................................................................ 2-12
2.2.2.3 Four Essential Elements of a Quebec Trust ........................................... 2-12
2.2.2.4 If a Settlor or Beneficiary Is the Trustee of a CCQ Trust ......................... 2-14
2.2.2.5 A CCQ Trust Continues and May Not be Revoked ................................. 2-14
2.2.2.6 Who Can Be a Settlor or a Trustee of a CCQ Trust? .............................. 2-14
2.2.2.7 The Common Law Trust ......................................................................... 2-15
2.2.3 Common Law Trusts and Quebec Trusts Compared ................................................ 2-15
2.2.4 Types of Trusts ......................................................................................................... 2-16
2.2.4.1 Common Law Only: Introduction ............................................................ 2-16
2.2.4.2 Quebec Only: Introduction ...................................................................... 2-16
2.2.5 Classifications Used to Describe Trusts .................................................................... 2-17
2.2.5.1 How the Trust Was Created: Express Trusts .......................................... 2-17
2.2.5.2 When the Trust Was Created: Inter Vivos and Testamentary Trusts ...... 2-18
2.2.5.3 Common Law Only: Purpose of the Trust ............................................... 2-18
2.2.5.4 Quebec Only: Purpose of the Trust ........................................................ 2-19
2.2.5.5 Interests in the Trust ............................................................................... 2-19
2.2.5.6 Personal Trusts: Further Classifications ................................................. 2-20
2.2.5.7 Common Law Only: Trusts Arising by Operation of Law – Resulting Trusts ...
................................................................................................................ 2-22
2.2.5.8 Quebec Only: Trust Arising by Operation of Law .................................... 2-23
2.2.5.9 Trust Classification Diagram ................................................................... 2-23
2.2.6 Common Law Only: Four Requirements to Establish a Trust .................................... 2-25
2.2.6.1 Capacity of the Relevant Parties ............................................................ 2-25
2.2.6.2 The Three Certainties ............................................................................. 2-26
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2.2.6.3 Constituting the Trust – Transferring the Assets ..................................... 2-27
2.2.6.4 Compliance with the Formalities ............................................................. 2-27
2.2.7 Quebec Only: Requirements to Establish a Trust ..................................................... 2-27
2.2.8 Choosing a Trustee .................................................................................................. 2-28
2.2.9 Accepting the Appointment as Trustee ..................................................................... 2-29
2.2.9.1 Common Law Only: Accepting the Appointment ..................................... 2-29
2.2.9.2 Quebec Only: Accepting the Appointment .............................................. 2-29
2.2.10 Trustee Duties .......................................................................................................... 2-29
2.2.10.1 Introduction ............................................................................................ 2-29
2.2.10.2 Overriding Duty of Care .......................................................................... 2-30
2.2.10.3 Duty Not to Delegate .............................................................................. 2-31
2.2.10.4 Duty of Loyalty (No Conflict of Interest) .................................................. 2-31
2.2.10.5 Duty of Impartiality .................................................................................. 2-32
2.2.10.6 Duty to Account (Provide Information) .................................................... 2-33
2.2.11 Trustee Powers ........................................................................................................ 2-33
2.2.12 Trustee Duties and Powers and the Administration of a Trust .................................. 2-34
2.3 Personal Representatives (Executors and Administrators; Liquidators in Quebec)
.................................................................................................................................. 2-34
2.3.1 What Is a Will? ......................................................................................................... 2-34
2.3.1.1 Terminology for Maker of a Will .............................................................. 2-34
2.3.1.2 When There Is No Will ............................................................................ 2-34
2.3.2 Personal Representatives (“Liquidators” in Quebec) ................................................. 2-35
2.3.2.1 When There Is a Will (Executor) ............................................................. 2-35
2.3.2.2 When There Is No Will or There Is No Executor ..................................... 2-35
2.3.3 Personal Representative Responsibilities 36
2.3.3.1 Common Law Only: Appointment of the Personal Representative .......... 2-36
2.3.3.2 Quebec Only: Appointment of the Liquidator .......................................... 2-37
2.3.4 Personal Representatives versus Trustees .............................................................. 2-37
2.4 Agents ..................................................................................................................... 2-38
2.4.1 Introduction to the Law of Agency ............................................................................. 2-38
2.4.1.1 Types of Agency Relationships .............................................................. 2-38
2.4.2 Responsibilities of an Agent ..................................................................................... 2-39
2.4.2.1 Agent for Executor .................................................................................. 2-39
2.4.3 Trustee Versus Agent ............................................................................................... 2-40
2.5 Substitute Decision-makers .................................................................................. 2-43
2.5.1 What Is a Substitute Decision-maker? ...................................................................... 2-43
2.5.1.1 Supported and Assisted Decision-making .............................................. 2-43
2.5.2 Financial and Legal Decision-makers ....................................................................... 2-43
2.5.2.1 Power of Attorney ................................................................................... 2-44
2.5.2.2 Guardian (Committee, Trustee, Tutors, and Curators) ............................ 2-46
2.5.2.3 Estate (Property) .................................................................................... 2-47
2.5.3 Personal and Health Care Decision-makers ............................................................. 2-47
2.5.3.1 Pre-Planning for Personal and Health Care Decisions – Terminology .... 2-47
2.5.3.2 Personal-care and Health-care Decisions Defined ................................. 2-48
2.5.3.3 Living Wills ............................................................................................. 2-49
2.5.3.4 Ulysses Agreements .............................................................................. 2-49
2.5.3.5 Personal Guardians ................................................................................ 2-49
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2.5.4 Requirements to Appoint a Substitute Decision-maker ............................................. 2-50
2.5.4.1 Appointment by the Adult ....................................................................... 2-50
2.5.4.2 Appointment by the Court ....................................................................... 2-50
2.5.5 Responsibilities of a Substitute Decision-maker ....................................................... 2-51
2.6 Legal Capacity ........................................................................................................ 2-51
2.6.1 Capacity to Enter a Transaction ................................................................................ 2-51
2.6.1.1 Legal Capacity and Age of Majority ........................................................ 2-52
2.6.1.2 Legal Capacity to Enter Transactions ..................................................... 2-52
2.6.1.3 Capacity to Make Decisions and Manage One’s Affairs .......................... 2-52
2.6.1.4 Terminology: Capacity, Capability, Incapacity, and Incapability .............. 2-53
2.7 Choosing a Fiduciary and Accepting a Fiduciary Appointment ......................... 2-54
2.7.1 Introduction .............................................................................................................. 2-54
2.7.2 Choosing a Fiduciary ................................................................................................ 2-54
2.7.2.1 Skill, Ability, and Time ............................................................................ 2-54
2.7.2.2 Availability and Alternates ...................................................................... 2-55
2.7.2.3 The Settlor as Trustee ............................................................................ 2-55
2.7.2.4 Location ................................................................................................. 2-55
2.7.2.5 How Many? ............................................................................................ 2-55
2.7.2.6 How Will Multiple/Co-fiduciaries Work Together? ................................... 2-56
2.7.2.7 Compensation ........................................................................................ 2-56
2.7.2.8 Willingness to Accept ............................................................................. 2-56
2.7.3 Corporate Trustees ................................................................................................... 2-56
2.7.4 Accepting a Fiduciary Appointment .......................................................................... 2-57
2.7.4.1 Reason for Being Appointed ................................................................... 2-57
2.7.4.2 Assets to be Managed ............................................................................ 2-57
2.7.4.3 Unique Characteristics of the Beneficiaries ............................................ 2-57
2.7.4.4 Time Involved and Duration of the Appointment ..................................... 2-58
2.7.4.5 Co-fiduciaries ......................................................................................... 2-58
2.7.4.6 Compensation ........................................................................................ 2-58
Figure 2.1: Classification of Trust Diagram ........................................................................................... 2-24

Figure 2.2: Common Law Only: Trust and Agency Compared ............................................................... 2-41
Figure 2.3: Quebec Only: Trust and Mandate Compared ....................................................................... 2-42
Figure 2.4: Age of Majority by Jurisdiction ............................................................................................ 2-52
Figure 2.5: Substitute Decision-makers of Jurisdiction .......................................................................... 2-59
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Chapter 2
Trustees, Personal Representatives, and

Substitute Decision-makers
Learning Objectives
This chapter examines the nature of the three fiduciary roles that are the subject of this
course – trustee, personal representative, and substitute decision-maker. The nature
and responsibilities of each are examined, with special attention to the nature of a trust.
The chapter ends with a review of the factors to consider when appointing or accepting
a fiduciary relationship. Upon completing this chapter, students will be able to:
 Summarize the nature of a trust
 Identify purposes for creating a trust
 Identify ways to classify a trust
 Identify who can make a trust and who can be a trustee
 Summarize the requirements to create a trust
o Common Law: Identify the three certainties required for a valid trust
o Quebec: Identify the four essential elements of a trust
 Summarize the core duties of a trustee
 Distinguish between a duty and a power
 Summarize the nature of a will
 Identify the different types of personal representatives
 List the responsibilities of a personal representative
 Distinguish the roles of a trustee and a personal representative
 Summarize the nature of an agency (mandate in Quebec)
 List examples of agency relationships
 Distinguish the roles of a trustee and an agent (mandate in Quebec)
 Summarize the nature of a substitute decision-maker’s role
 Identify the types of substitute decision-maker roles
 Identify the requirements for appointing substitute decision-makers
 Summarize the responsibilities of substitute decision-makers
 Identify the two tests that must be satisfied to have legal capacity to enter a
transaction
 Identify factors to consider when selecting a fiduciary
 Identify the factors to consider before accepting a fiduciary appointment
 Identify issues to be addressed when two or more fiduciaries are appointed to act
together
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REMINDER: Terminology varies significantly between provinces, and even more
so with Quebec. This chapter introduces a number of names and terms for different
types of fiduciaries. For ease of reading, as terminology is defined, one word or
phrase is selected for purposes of the materials in this course. Jurisdiction-specific
terminology is only used if required. See the Generic Terms Cheat Sheet for the full
list of generic terminology.
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Trustees, Personal Representatives, and Substitute Decision-makers
2.1 INTRODUCTION
Whether one is appointed to act as a fiduciary or is providing advice or services to a fiduciary, it
is important to appreciate the nature of the duties and responsibilities of the different fiduciary
roles, as well as their similarities and their differences.
This chapter introduces students to each of the roles addressed in this course – trustee, personal
representative, and substitute decision-maker. The nature and responsibilities of each are
examined, with special attention to the nature of a trust and the core duties of a trustee that apply
to all fiduciary roles.
The chapters that follow examine the details of those responsibilities as they apply to personal
representatives and substitute decision-makers.1
For students employed by corporate trustees it is important to be able to anticipate what the
responsibilities will be before accepting the appointment. Although not everything can be
known, an experienced fiduciary will be able to review available information and ask important
questions. Similarly, a legal professional advising a potential fiduciary should be able to identify
and explain the nature of the role and the responsibilities to the client when creating the
document, and/or to the fiduciary before an appointment is accepted. Based on the information
gathered, the fiduciary will be able to anticipate the nature and scope of the responsibilities being
accepted. Issues to be considered include:
 the practical responsibilities that will arise when dealing with assets and liabilities,
 legal and tax issues that may need to be addressed, and
 issues that may arise between the fiduciary and the beneficiary or others, including a co-
fiduciary or, if the client is alive, family members or other key persons.
Ultimately, the fiduciary needs to determine whether or not the compensation that will be earned,
if any, is sufficient for the responsibilities and time involved, including the risks and issues to be
addressed. An appreciation of the fiduciary’s duties and responsibilities, as well as the issues that
can arise, will also assist students who will be advising or assisting a client who has accepted a
fiduciary role.
Students who complete the full Certificate in Estate and Trust Administration will acquire these
skills.
2.1.1 Quebec Only: Administration of the Property of Others

Trustees, liquidators, tutors, curators, and mandataries in Quebec are generally referred to as
administrators of the property of others. In addition to the specific rules that apply to each role,
they are subject to the general rules set out at articles 1299-1370 CCQ found in Book 4, Title 7.
These rules codify the standards that govern the conduct of administrators and will be referred to
1
More detailed discussion of issues unique to the law and administration of trusts is found in the second course in
the Certificate to Estate and Trust Administration program, Advanced Topics in Estate and Trust Administration
(CETA 2). Hereafter referred to as CETA 2.
2-6
throughout this course. A brief overview is set out below to introduce students to these
provisions. The applicable laws are addressed in more detail in this course and in CETA 2.
Article 1299 CCQ stipulates that a person charged with the administration of property that is not
his own is governed by the general rules regarding the administration of the property of others,
except where more specific rules (in the law or the governing act) apply to his particular type of
administration.
Although a trust is not a “person” in Quebec law, the trust has a patrimony that is distinct from
the patrimonies of the settlor, the trustee(s), and the beneficiaries.
The articles from the CCQ that govern the administration of the property of others are identified
and briefly summarized here.
 Article 1300 CCQ provides for when an administrator may be remunerated (see Chapter
9 Compensation and Expenses).
 Articles 1301-1305 CCQ establish the general rules governing the duties and authority of
an administrator responsible for the simple administration of the property of others. This
includes acting as a liquidator (unless the will provides otherwise) (see Chapter 4 Initial
Stages of an Estate Administration) and a tutor (see Figure 2.5 Substitute Decision-
makers by Jurisdiction and Chapter 11 Substitute Decision-makers for Financial Affairs).
 Articles 1306-1307 CCQ establish the general duties and obligations for an administrator
with full administration of the property of others. This includes trustees (unless the trust
deed provides otherwise) (see remainder of Chapter 2 and CETA 2) and curators (see
Figure 2.5 Substitute Decision-makers by Jurisdiction and Chapter 11 Substitute
Decision-makers for Financial Affairs).
 Articles 1308-1370 CCQ set out the general rules of administration. They deal with:
o obligations of the administrator towards the beneficiary (arts. 1308-1318 CCQ)
(see 2.3.3 Personal Representative Responsibilities and CETA 2);
o obligations of the administrator and beneficiary to third parties (arts. 1319 – 1323
CCQ) (see 2.3.3 Personal Representative Responsibilities and CETA 2);
o inventory, security, and insurance over property and/or to guarantee performance
of administrator’s obligations (arts. 1324-1331 CCQ) (see Chapter 5 Estate
Assets);
o joint administration and delegation (arts. 1332-1338 CCQ) (see 2.2.10.3 Duty Not
to Delegate; Chapter 9 Compensation and Expenses and CETA 2);
o presumed sound investments (the investment rules that apply to simple
administration) (arts. 1339 – 1344 CCQ) (see CETA 2);
o apportionment of profit and expenditure (arts. 1345 – 1350 CCQ) (see Chapter 10
Estate and Trusts Accounts);
o annual accounts (arts. 1351-1354 CCQ) (see Chapter 10 Estate and Trusts
Accounts); and
o termination of administration, including final accounts; resignation, death, and
replacement of an administrator; liability; administration expenses; and delivery
of property (arts. 1355-1370 CCQ) (see Chapter 6 Estate Liabilities and Claims
2-7
Against the Estate, Chapter 7 Estate Beneficiaries, Chapter 10 Estate and Trusts
Accounts and CETA 2).
2.2 TRUSTEES
2.2.1 Common Law Only: What Is a Trust?
2.2.1.1 Definition
The trust is unique to the common law. Many have attempted to define it. A definition
frequently cited with judicial approval is,
[A] trust is an equitable obligation, binding a person (called a trustee) to deal
with property over which he has control (which is called the trust property, being
distinguished from his private property) for the benefit of persons (who are called
the beneficiaries or, in old cases, cestuis que trust), of whom he may himself be
one, and any one of whom may enforce the obligation. 2
2.2.1.2 Three Essential Features of the Common Law Trust

At the core, there are three essential features or characteristics of a trust that are
fundamental to understanding the unique nature of the common law trust. The three
essential features of a trust identified by Waters are:
1. A fiduciary relationship: Unlike a company, a trust is not a legal entity.
Although many professionals speak of “a trust” as if it is an entity, in fact, a trust
is a fiduciary relationship where one party (the settlor) transfers property to
another (the trustee) to hold title to and manage that property for the benefit of a
third party (the beneficiary) who has the exclusive enjoyment of the property.3 It
is this relationship between the trustee and beneficiaries that gives rise to the
trustee’s duties discussed below (see 2.2.9 Accepting the Appointment as
Trustee).
2. Dual ownership: A trust divides the legal ownership (title) and beneficial
ownership (enjoyment). The trustee holds the legal title and is the only party able
to deal with the assets in the trust (e.g. sell, transfer, collect income). The
beneficiary holds the equitable (or beneficial) title. Only the beneficiary is entitled
to enjoy the benefits of the property. The benefits or interests may include
receiving income such as interest, dividends or rents; having the right to live in a
home; or receiving the capital or assets at some future time. Different
beneficiaries may be entitled to one or more rights to the enjoyment of the
property. Historically, the beneficiary’s rights were protected by the courts of
2
D.J. Hayton, P. Matthews and C. Mitchell, Underhill and Hayton: Law Relating to Trusts and Trustees, 18th ed.
(London: LexisNexis Butterworths, 2010) at p. 2 as cited in Waters, at p. 4.
3
Waters at p. 9.
2-8
equity.4 The duty to account (see 2.2.10.6 Duty to Account (Provide Information))
assists the beneficiary to learn about the trust and the decisions of the trustee so
that the beneficiary can enforce his or her rights.
3. Separation of title from trustee’s own assets: Separation of title ensures that the
assets of the trust are not available to the trustee’s personal creditors to satisfy a
personal debt of the trustee.5 It is for this reason that a trustee is required to keep
assets separate and to not mingle the trust assets with his or her own.
Example: Benjamin transfers a house and a portfolio of stocks and bonds to David as
trustee. David is instructed to allow Benjamin’s only daughter, Maria, to live in the
house and to pay Maria the interest and dividends from the investments. When Maria
dies, David is to sell the assets and distribute the cash to Maria’s two children.
The house and the investment accounts are transferred into David’s name as trustee.
David holds legal title and is the only one able to sell or transfer the assets, and to collect
the income. Maria and her children are the beneficiaries and have the equitable or
beneficial ownership in the assets.
In the example above, only David, as legal owner, may deal with the assets. Maria, as a
beneficial owner, is entitled to enjoy the use of the house and to receive the income
earned from the investments.
Different terms are used to describe Maria’s interest and they are used interchangeably in
this course. “Revenue beneficiary” is most common in Quebec, and is also used in the
common law jurisdictions. Another term used in the common law, and in the Income Tax
Act, and sometimes in Quebec as well is “income beneficiary”. The term “life tenant” is
sometimes used in common law jurisdictions, particularly when the beneficiary’s interest
involves the use of a property such as living in the home. In this case Maria would have a
“life interest” in the home.
Maria’s children also have a beneficial interest. However, it is limited to the capital or
residue of the trust and is postponed to a future date. Terms to describe their interest
include “capital beneficiaries” or “residual beneficiaries”. These terms are used
interchangeably in this course.
2.2.1.3 A Trust Continues

Although a trust is not a legal entity, if a trustee dies, becomes incapable, or can no
longer act, the trust does not come to an end. If an alternate trustee is identified in the
trust document, the alternate assumes control. Legislation also provides a mechanism for
replacing a trustee.6
4
For a full discussion of the evolution of the trust and the beneficiary’s equitable rights, see Waters at pp. 9-14.
5
Waters at p. 13.
6
“[N]o trust fails for want of a trustee … the court will appoint a trustee rather than see the trust fail.” See Waters at
p. 9. Replacement of a trustee is addressed in CETA 2.
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2.2.1.4 A Trust Is Irrevocable

When the legal title of assets are transferred to a trustee, the transferor (or settlor) no
longer owns or controls the assets. It is for this reason that the terms of the trust must
address the trustee’s duties and powers, and provide guidance on who is to be a
beneficiary and when.
A trust is irrevocable (e.g. the settlor cannot undo or revoke the transfer) unless the settlor
specifically includes a provision in the document that states the trust is revocable.7
2.2.1.5 A Settlor May Be a Trustee or a Beneficiary and/or Reserve

Powers
When establishing an inter vivos trust, the settlor may:
 reserve certain powers,
 be appointed as a trustee, and/or
 be named as a beneficiary.
Reserved powers might include the power to change or replace a trustee, decide
beneficiaries, or deal with specified administration decisions.
There can be important tax consequences if the settlor of an inter vivos trust retains
control or receives benefits from the trust. They are dealt with in the third course in the
Certificate to Estate and Trust Administration program.8
2.2.1.6 Who Can Be A Settlor or a Trustee?

Any adult with legal capacity can be a settlor. A corporation, as a legal entity, may also
settle a trust. In some situations more than one person or corporation may be able to
contribute to a trust.
Individuals may be appointed as trustees. However, the individual must be an adult
before he or she can start acting.
Regulated trust companies may also offer services to the public as trustees. Non-
regulated companies may be permitted in some provinces to be a trustee, but they may
not offer services to the public.
Note: If there is more than one trustee, decisions must be made unanimously unless the
trust document provides otherwise or the governing law permits majority rule. (See
CETA 2 for a review of the relevant law.)
7
A revocable trust can have unintended tax consequences. Therefore, they are only used in certain circumstances.
Revocable trusts are not permitted in Quebec.
8
Estate and Trust Taxation (CETA 3). Hereafter referred to as CETA 3.
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2.2.1.7 The Quebec (Civil Code) Trust9

For purposes of trust administration, the Quebec trust under the CCQ is similar to a
common law trust. The trustee must administer the property in the trust, according to the
terms of the trust and the applicable law for the beneficiaries. However, the legal basis
for the CCQ trust is based on a legal concept more familiar to the civil law.
2.2.1.8 Establishing a Trust Under the CCQ

The civil law does not recognize the common law concept of dual ownership, an essential
feature of the common law trust. The CCQ 1991 came into force on January 1, 1994.
Among other changes to the law it introduces a new law governing trusts.10 The new
CCQ provides that a trust is established when:
 the settlor transfers property to another patrimony constituted (or established) by
the settlor and that is appropriated to a particular purpose (e.g. for the benefit of
persons or a charitable or other purpose) and
 the trustee agrees to hold and administer the patrimony.11
The trustee has the control and exclusive administration of the property and titles to the
property are drawn up in the trustee’s name.12 Neither the settlor, trustee, nor beneficiary
is an owner of the property. The trustee is considered an administrator of the property of
others and the property held in the patrimony is to be administered for the purpose for
which the trust was established.
Unlike common law trusts, a Quebec trust may not be set up as a revocable trust. Other
similarities and differences between the common law and Quebec civil law trust are
noted throughout this course.
2.2.2 Quebec Only: What Is a Trust?

The rules for establishing, administering and terminating a trust are found in articles 1260-1298
CCQ. Articles 1266-1273 CCQ describe the classification of the different kinds of trusts that can
be established, how they may be established, their purpose and duration. These rules were
introduced January 1, 1994, as part of the new Civil Code of Quebec.13
9
Common law students are only responsible for this short discussion of the Quebec Trust.
10
This course only deals with the new laws. Generally, the CCQ applies to all existing and new trusts from January
1, 1994. If a trust existed prior to January 1, 1994, and does not comply with the new law, legal advice should be
obtained.
11
See CCQ, art. 1260 which came into force in 1994. See also 2.2.2 Quebec Only: What Is a Trust? for more
information about the concept of the patrimony.
12
See art. 1278 CCQ.
13
The CCQ came into force on January 1, 1994. It was a substantial reform of the law. For purposes of this course
we study the current law. Generally, the CCQ applies to existing and new trusts from January 1, 1994. If a trust
existed prior to January 1, 1994 and does not comply with the law, legal advice should be obtained.
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2.2.2.1 The Patrimony

In order to understand the unique nature of the trust within the civil law context, it is
helpful to first explain the concept of the patrimony. “Patrimony” has been defined as
“the whole of the rights and obligations of a person having economic or pecuniary
value.”14
Example: Pierre has assets worth $1milllion. His obligations to creditors are $200,000.
This is Pierre’s patrimony. He cannot separate the assets and the obligations. The assets
are available to satisfy the debts owed.
Article 2 of the CCQ provides that “every person is the holder of a patrimony. However
the article goes on to say that the patrimony “may be the subject of a division or of an
appropriation to a purpose, but only to the extent provided by law.”
A person’s patrimony can therefore be divided,15 or part of the patrimony can be
appropriated to a purpose (for example, transferred to a trust) as long as it is in
accordance with the law. Importantly for purposes of understanding the legal status of a
CCQ trust, a patrimony may be established and recognized without attaching itself to any
physical or legal person and without having its own juridical personality.16
2.2.2.2 Definition
Article 1260 CCQ provides that “a trust results from an act whereby a person, the settlor,
transfers property from his patrimony to another patrimony constituted by him which he
appropriates to a particular purpose and which a trustee undertakes, by his acceptance, to
hold and administer.” Although the trust has a patrimony, it is not a “person” in law.
2.2.2.3 Four Essential Elements of a Quebec Trust

Articles 1260 and 1261 CCQ set out the four essential elements of the trust.
1. A transfer of property: The transfer may arise as a result of a contract, a will, or in
some cases by law, including by judgment of the court (see art. 1262 CCQ).
2. The transfer is to a distinct patrimony: The trust patrimony that consists of the
property transferred to the trust, constitutes a “patrimony by appropriation”. The
patrimony is autonomous and distinct from the patrimony of the settlor, the trustee,
and the beneficiary. None of them have any real right in the patrimony (art. 1261
14
Paul-André Crépeau Center for private and comparative Law, Private Law Dictionaries Online, (Montreal:
McGill University, 2014), see https://nimbus.mcgill.ca/pld-ddp/dictionary/search “Patrimony”. See also
Professor Lionel Smith, “Trust and Patrimony” [2009] 28 ETPJ 332 at 335.
15
For example, a legal person (art. 302 CCQ) and during the liquidation of a succession (art. 780 CCQ). For the
purposes of the family patrimony in the case of liquidation of a succession, the term has a different nuanced
meaning and not the classical meaning.
16
M Piccini Roy, Trusts in Some Civil Law Jurisdictions: The Quebec Experience, p 4, STEP Global Congress, Nov
6-7, 2014, Miami, USA.
2-12
CCQ). For administration purposes, however, title to the property is in the trustee’s
name (art. 1278 CCQ).
3. The patrimony is appropriated to a particular purpose: The CCQ recognizes three
purposes: personal trusts for the purpose of securing a benefit for a person (art. 1267
CCQ); private trusts for the erection, maintenance, or preservation of a thing or the use
of property appropriated to a specific use, whether for the indirect benefit of a person
or in his or her memory, or for some other private purpose (art. 1268 CCQ); and social
trusts for a purpose of general interest, such as a cultural, educational, philanthropic,
religious, or scientific purpose and that does not have the making of profit or the
operation of an enterprise as its main object (art. 1269 CCQ). These purposes are
discussed further (see 2.2.4.2 Quebec Only: Introduction (under Types of Trusts) and
2.2.5.4 Quebec Only: Purpose of the Trust).
4. The trustee’s acceptance is an undertaking to hold and administer the
patrimony: In accepting this undertaking, the trustee is bound to the law and the
terms of the document or judgement that create the trust.
Article 1264 CCQ provides that a trust is constituted upon the acceptance of the trustee or
of one of the trustees if there are several. The trust is constituted by the trustee’s
acceptance of the mission or office of trustee, not strictly speaking of the property
transferred to the trust patrimony. In the case of a testamentary trust, the effects of the
trustee's acceptance are retroactive to the date of death.
Article 1265 CCQ provides that “acceptance of the trust divests the settlor of the
property, charges the trustee with seeing to the appropriation of the property and the
administration of the trust patrimony and is sufficient to establish the right of the
beneficiary with certainty.”
Example: Benjamin transfers a house and a portfolio of stocks and bonds to David as
trustee. David is instructed to allow Benjamin’s only daughter, Maria, to live in the
house and to pay Maria the interest and dividends from the investments. When Maria
dies, David is to sell the assets and distribute the cash to Maria’s two children.
The house and the investment accounts are transferred into David’s name as trustee.
David is the holder of the trust property and is the only one able to sell or transfer the
assets, and to collect the income. Maria and her children are the beneficiaries.
In the example above, only David, as administrator of the trust property, may deal with
the assets (art. 1278 CCQ). He has control and possession of the property. Maria is a
beneficiary. She has a personal right to enforce the enjoyment of the property granted to
her by her father (art. 1284 CCQ) (she is entitled to live in the house) and to receive the
income earned from the investments.
Different terms are used to describe Maria’s interest. “Revenue beneficiary” is most
common in Quebec. Another term used in the common law, as well as in the Income Tax
Act, is “income beneficiary”. These terms are used interchangeably in this course.
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In Quebec, this use of the home would constitute a right of use and habitation and the
rules of usufruct would apply. Maria would be referred to as a usufructary. Usufructs are
not discussed in this course.17
Maria’s children also have an interest in the trust. However, it is limited to the capital of
the trust and is postponed to a future date. The term to describe their interest is “capital
beneficiaries”.
2.2.2.4 If a Settlor or Beneficiary Is the Trustee of a CCQ Trust

When establishing a trust, if the settlor or beneficiary is also the trustee, there must be
another trustee who is neither the settlor nor a beneficiary (art. 1275 CCQ). This is an
imperative provision of the law. Infringing this rule could cause the trust to be null. If
there is no replacement mechanism in the trust agreement to remedy this, an application
should be made to the court (art. 1277 CCQ). When establishing a trust, the CCQ permits
the settlor to be a beneficiary (art. 1281 CCQ) or to reserve a power to make decisions
about who should be a beneficiary and/or their shares (art. 1282 CCQ).
There can be important tax consequences if the settlor of an inter vivos trust retains
control or receives benefits from the trust. They are dealt with in CETA 3.
2.2.2.5 A CCQ Trust Continues and May Not be Revoked

If a trustee dies, becomes incapable, or can no longer act, the trust does not come to an
end. If a replacement is identified in the trust document, the replacement assumes control.
The CCQ provides a mechanism to obtain judicial appointment of a replacement trustee
(art. 1277 CCQ).18
Unlike a common law trust, a CCQ trust cannot include a provision that gives the
settlor’s authority to later revoke the trust.19 However, the settlor can reserve the right to
receive the fruits and revenues, and/or the capital as a beneficiary (art. 1281 CCQ).
2.2.2.6 Who Can Be a Settlor or a Trustee of a CCQ Trust?

A settlor can be a natural person or a legal person (art. 1260 CCQ). A “person” means a
natural person (art. 1 CCQ) or a legal person (art. 298 CCQ). In some situations, it may
be possible for more than one person to contribute to the trust patrimony.
A trustee can be a natural person who has full exercise of his or her civil rights (e.g.
capacity), or any legal person authorized by law (only a trust company licensed to carry
on business in Quebec).20 More than one person may be appointed.
17
Usufructs are addressed in arts. 1120-1136 of the CCQ. Usufructs in place before the CCQ 1991 are governed by
the old code (arts. 1426-1433)
18
Replacement of a trustee is addressed in CETA 2.
19
Although it is possible for the settlor of a common law trust to reserve a power to later revoke the trust, a
revocable trust can have unintended tax consequences. Therefore, they are only used in certain circumstances.
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Note: Where there are more than two trustees, a majority can act unless the trust or the
law requires them to act jointly or provides another rule (art. 1332). Further discussion on
the rule and how to deal with disputes is addressed in CETA 2.
2.2.2.7 The Common Law Trust21

The Quebec trust, as introduced in 1994, finds its roots in the civil law and the concept of
the patrimony. Trusts have a long history in the common law. The common law approach
differs from Quebec’s approach in that ownership of property is divided between the
legal and beneficial ownership. The trustee has legal ownership (including title to the
property) that allows the trustee to deal with the property and collect income from it. The
beneficiary has the beneficial ownership that is the right to enjoy the use and benefit of
the property.
Although this course and texts refer to “the trust” as if it is a legal entity, the common law
trust is not a legal entity and neither is the civil law trust. Rather, the common law trust is
described as a relationship where the trustee is responsible for administering the assets
held by the trustee for the benefit of the beneficiaries or other purposes, any one of whom
may enforce the trustee’s obligation. The civil law trust has also been similarly described.
Although legal title and ownership of the property held in the trust is transferred to the
trustee, the trustee holds the property in trust and, similar to a CCQ trust, the property is
not available to the trustee’s personal creditors.
2.2.3 Common Law Trusts and Quebec Trusts Compared

In the foregoing sections, students have been introduced to the nature of a common law trust and
trust under the CCQ, depending on the jurisdiction in which they live. A brief description of the
other legal system is offered. Although the legal underpinnings of the nature of a trust under each
system of law are very different, for administration purposes, there are many similarities. These
include those listed below.
 Property is transferred from the settlor to the trustee.
 The settlor no longer has ownership rights in the property in the trust.
 The trustee’s creditors have no rights to satisfy their claims out of the trust property.
 The trust property is a separate or segregated fund.22
 The trustee has a duty to administer the trust property for the benefit of the
beneficiaries.
 The beneficiaries have legal rights to require the trustee to comply with the duties set
out in the law and in the trust.
20
Art. 1274 CCQ and An Act Respecting Trust Companies and Savings Companies, CQLR c. S-29.01.
21
Quebec students are only responsible for this section of the materials. For further reading, see 2.2.1 Common Law
Only: What Is a Trust?
22
Some also refer to it as a “ring fenced fund”.
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2.2.4 Types of Trusts
2.2.4.1 Common Law Only: Introduction

Trusts are established for a variety of purposes and can be created in a number of ways.
Trusts are created to benefit individuals (personal trusts) or charitable purposes (purpose
trusts). These trusts are usually evidenced by a trust document that identifies the trustee,
the property to be held, and the beneficiary(ies) or purpose. The terms of the trust provide
for what each beneficiary is or may be entitled to and when. The terms of the trust also
set out when a trust will come to an end. Personal trusts may not continue in perpetuity.
Charitable purpose trusts can be perpetual. These rules are discussed in CETA 2.
Trusts may be used to achieve non-personal objectives. Examples of non-personal trusts
that may be familiar to students include pension funds and mutual funds. These non-
personal uses of trusts are outside the scope of this course.
Trusts can also arise by operation of law. There are two kinds of trusts in this category –
resulting trusts and constructive trusts. Trusts that arise by operation of law are enforced
by the courts.
This course is concerned with personal trusts and purpose trusts. Resulting trusts are
discussed briefly.
2.2.4.2 Quebec Only: Introduction

As set out in article 1262, trusts are established in a number of ways:
 by contract by onerous title (e.g. an investment trust where there is an exchange
between the parties);
 by contract by gratuitous title (e.g. a trust constituted by a settlor while living is a gift.
There is no exchange or payment to the settlor in return for constituting the trust.);
 by will (e.g. the liquidator administers the estate and the residue is held in trust);
 by operation of law; or
 when established by an order of the court (e.g. for payment of alimony).
The CCQ recognizes three kinds of trusts (art. 1266 CCQ).
1. Personal Purposes (a personal trust): Personal trusts are constituted gratuitously in
order to procure a benefit for one or more persons (determinate or determinable) (art.
1267 CCQ). They may also be established in a will. Personal trusts cannot continue in
perpetuity. There can only be two ranks of revenue beneficiaries, exclusive of the
capital beneficiary (art. 1271 CCQ), the right of the first rank must open within 100
years after the trust is constituted and a legal person cannot be a beneficiary for longer
than 100 years (art. 1272). These rules are discussed in CETA 2.
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2. Social Utility Purposes (a social trust): Social trusts are constituted gratuitously and
are defined as a trust for a purpose of general interest, such as a cultural, educational,
philanthropic, religious, or scientific purpose (art. 1270 CCQ).23 Social purpose trusts
can be perpetual (art. 1273 CCQ). A foundation may be established as a social purpose
trust or as a corporation.
3. Private Purposes (a private trust): Examples of private trusts include trusts for
purposes such as erecting, maintaining, or preserving a thing or for a specific use,
whether for the indirect purpose of a person or in his memory, or for some other
private purpose (art. 1268 CCQ).These trusts are essentially non-charitable purpose
trusts. Such trusts may be established by gratuitous title, or by will. Private trusts
include trusts established by onerous title such as for making profits from investments,
providing for retirement or procuring a benefit for the settlor, others designated by the
settlor, members of a partnership, company or association, or for employees or
shareholders (art. 1269 CCQ). Examples of private trusts that may be familiar to
students include pension funds and mutual funds. Private trusts may also be perpetual
(art. 1273 CCQ).
Each kind of trust, unless arising by operation of law or when established by the court, is
evidenced by a trust document that identifies the trustee, the property to be held, and the
beneficiary(ies) or purpose. The terms of the trust provide for what each beneficiary is or
may be entitled to and when. The terms of the trust also set out when a trust will come to
an end.
An order by the court will establish similar details.
This course is concerned with personal and social trusts, whether established by a person
while alive, in a will, or by the court.
2.2.5 Classifications Used to Describe Trusts

Trusts are often referred to by special names or classifications. These names and classifications
provide a vocabulary for fiduciaries and their advisors to quickly identify, one or more of the
following: how the trust was created, when the trust was created, the purpose of the trust, the
type of interest or interests one or more beneficiary will have, and/or specific rules that may
apply.
2.2.5.1 How the Trust Was Created: Express Trusts

An “express trust” is a trust that is intentionally created, usually in writing. (See 2.2.6
Common Law Only: Four Requirements to Establish a Trust.) For an example of an
express inter vivos trust and a will with a testamentary trust, see Student Resources.
23
Note: Social purpose trusts are similar to the common law charitable purpose trust, but they include a broader
number of purposes. These will be explore further in CETA 2 and the tax implications will be explored in CETA
3.
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Within this classification, there are a number of sub-classifications that are described
briefly below.
2.2.5.2 When the Trust Was Created: Inter Vivos and Testamentary Trusts
Trusts can be created when the person establishing the trust is alive or on death.
A trust created during the creator’s lifetime is called an “inter vivos trust”. Inter vivos is
Latin for “between the living”. The person who creates the trust must transfer or “settle”
property on the trust and is called a settlor.
Common Law Only: The document that evidences the trust is often called a “trust
deed” or “trust settlement”.
Quebec Only: The document that evidences the trust is often called a “trust deed” or
“trust agreement”.
Sometimes inter vivos trusts are called “living trusts”, a term often used in the United
States. The assets in an inter vivos no longer belong to the settlor so the trust continues
after the settlor’s death. Because the assets are no longer part of the settlor’s assets they
do not pass under the settlor’s will. In jurisdictions where probate is required the settlor’s
assets that are in the trust are not reported and are not subject to probate fees or taxes.
(See Chapter 4 at 4.5 Grant of Probate or Administration.) If permitted in the trust
document, assets may be transferred to the trust in the future by the settlor, or others.
When a trust is created on death, the terms of the trust are set out in the deceased’s will
and the trust is called a “testamentary trust”. When the estate is administered, the residue
of the estate or a specified amount or asset is set aside and administered as a trust. In
addition to signalling that the trust was created on the death of the testator, this distinction
is important for tax purposes because special rules apply to testamentary trusts (see
Chapter 8 Personal Tax Returns Due on Death). The Income Tax Act defines a
testamentary trust for tax purposes and transfers of additional assets to the trust are not
permitted.
2.2.5.3 Common Law Only: Purpose of the Trust

Another way to classify a personal trust is by the purpose of the trust. Is the trust
established to benefit one or more persons, or is it established to carry out certain
purposes? The trust may be an inter vivos or testamentary trust.
 A trust for persons or personal trust, whether inter vivos or testamentary,
benefits one or more persons. Beneficiaries may also include legal entities such a
specific charity or other legal entity. The beneficiaries of the personal trust are
entitled to enforce the interest in the trust.
Trusts for persons are often created to achieve one or more objectives. As a result
many additional classifications and names have evolved to describe the nature of
entitlement for one or more beneficiaries. The names may also signal that a trust
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meets specific tax rules and, as a result, attracts certain tax treatment. (For
examples, see 2.2.5.5 Interests in the Trust.)
 A trust for purposes does not have individuals or specific entities as
beneficiaries. Rather, the trust funds are to be held and used for specific purposes.
These trusts may be for charitable or non-charitable purpose trusts. The
distinction is important because different laws apply to how long the trust can
continue and different tax laws apply. These rules will be discussed in the CETA
2 and CETA 3 courses.
2.2.5.4 Quebec Only: Purpose of the Trust

Another way to classify a personal trust is by the purpose or objects of the trust. As noted
above, the CCQ recognizes three kinds of trusts: personal trusts, private trusts, and social
utility trusts. The trust may be inter vivos or testamentary.
 A personal trust, whether inter vivos or testamentary, benefits one or more
determinate or determinable persons (arts. 1267, 1271, and 1272 CCQ). “Persons”
include natural persons and legal persons authorized by law such as a corporation
or a charity. The beneficiary is able to enforce his or her personal rights for the
provision of a benefit granted to him or her or payment owing to him or her,
pursuant to the constituting act (art. 1284 CCQ).
Personal trusts are often created to achieve one or more objectives. As a result
many additional classifications and names have evolved to describe the nature of
entitlement for one or more beneficiaries. The names may also signal that a trust
meets specific tax rules and, as a result, attracts certain tax treatment. (For
examples, see 2.2.5.5 Interests in the Trust.)
 A private trust does not have individuals or specific entities as the direct
beneficiaries, but natural or legal persons are indirectly benefitted. Rather, the
trust funds are to be held and used for specific uses or purposes (arts. 1268, 1269,
and 1273 CCQ).
 A social trust also does not have persons as the direct beneficiaries, but natural or
legal persons are indirectly benefitted. It must be for a purpose of general interest
and may be perpetual (arts. 1270 and 1273 CCQ).
The distinctions are important because, as noted above, personal trusts cannot continue in
perpetuity and different tax laws apply. These rules will be discussed in the CETA 2 and
CETA 3 courses.
2.2.5.5 Interests in the Trust

Trusts are often distinguished by the different interests that one or more beneficiary(ies)
or groups of beneficiaries may have. These include:
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 An income or revenue interest generally refers to a beneficiary’s entitlement

to receive the income earned in the trust for a period of time, often until a
certain age or death. Income (or revenue) includes interest, dividends, and
rents. (Quebec Only: See also art. 910 CCQ for a definition of fruits and
revenues.)
o Common Law Only: A life interest refers to a beneficiary’s right to
enjoy the use of a property or asset during his lifetime. A common example
is the right to live in a residence held in trust. A life interest can include
the right to receive the income from the assets during the beneficiary’s
lifetime. The term may be used to include an income or revenue interest.
o Quebec Only: If a beneficiary has a right to enjoy the use of a property or
asset during the beneficiary’s lifetime, the beneficiary is referred to as a
usufructuary (arts. 1120 & ff. CCQ).
 A capital interest generally refers to a beneficiary’s interest in the property
that makes up the trust. Property may include land, a home, investments,
private company shares, cash, or other types of property. As assets are sold
and the proceeds are reinvested, the gains realized on the sale form part of the
capital. Losses will reduce the capital. Capital interests are usually paid or
delivered to capital beneficiaries when the trust terminates. However, the trust
may provide for a beneficiary to receive payments from the capital throughout
the duration of the trust (often called “encroachments on capital”) or it may
provide that a percentage or specific amount should be paid at certain points
in time (e.g. upon the beneficiary reaching a certain age). (Quebec Only: See
also art. 909 CCQ.)
2.2.5.6 Personal Trusts: Further Classifications

Often a personal trust will provide for a spouse and then children. Or a parent may
provide for children and then grandchildren. Parents may want to provide for a specific
child with special needs. Many combinations are possible.
The following is a list of the more common classifications and uses of personal trusts
with a brief definition. Often these classifications will overlap. One does not preclude the
other. For example, a fixed interest trust might also be a life interest trust or a trust for a
disabled person may be a fully discretionary trust.
 Fixed interest trust: A trust that specifies exactly what a beneficiary is
entitled to. For example, the trustee may be directed to pay the net income
earned each year or a fixed amount at regular intervals (e.g. $1,000/month) to
a beneficiary.
 Life interest trust: As discussed above, a life interest trust provides for a
beneficiary for that beneficiary’s life. It may include the use of the family
home or another property, and/or a right to income. On the beneficiary’s
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death, the settlor provides instructions on where to distribute the funds, or the
trust may continue for others.
 Discretionary trust: A trust where the trustee has some discretionary powers,
within specified guidelines, to distribute income and/or capital to one or more
beneficiaries. The discretion may be limited to choosing who is to receive
income and/or capital, or it may allow the trustee to decide how much and/or
when to distribute.
Quebec Only: Note that the class of discretionary beneficiaries for a
personal or private trust must be clearly determined in the trust deed (see art.
1282 CCQ).
 Fully discretionary trust: Generally, this is a trust where the trustee has full
discretion as to when, how much, and to whom income or capital should be
distributed. The trust will establish the class or group of individuals who are
the beneficiaries who may receive the funds.
Quebec Only: Note that the class of discretionary beneficiaries for a
personal or private trust must be clearly determined in the trust deed (see art.
1282 CCQ).
 Trust for a disabled person (Henson Trust)
Common Law Only: A fully discretionary trust created to provide for a
beneficiary who has a disability and is entitled to receive certain provincial
benefits, which may range from income assistance to access to specialized
services.24 Where a trust is fully discretionary, subject to provincial
legislation that provides otherwise, benefits will not be discontinued if the
distributions from the trust meet provincial criteria.25
Quebec Only: Trusts for the benefit of persons receiving social assistance
may be recognized if the intent of the settlor that the beneficiary continue to
benefit from government welfare programs is clearly expressed.26
 Spousal and common-law partner trusts: Generally, the term “spousal
trust” is used when the terms of the trust meet very specific requirements of
the Income Tax Act. When these requirements are met, certain tax rules apply.
24
For example, see the Ontario Family Benefits Act, R.S.O. 1990, c. F.2; and the British Columbia, Employment and
Assistance for Persons with Disabilities Act, S.B.C. 2002, c. 41.
25
The term “Henson Trust” was adopted in Ontario as a result of the case Ontario (Ministry of Community and
Social Services, Income Maintenance Branch) v. Henson (1987), E.T.R.121 (Div. Ct.) affirmed on appeal (1989),
36 E.T.R. 192 (C.A.). The court held that a beneficiary of a fully discretionary trust does not own any of the trust
property and is not entitled to receive trust income. As a result, provincial benefits could not be terminated. The
Ontario government, and many other governments, now recognize this kind of planning and have developed
policies and/or legislation to address what a beneficiary is entitled to receive from a trust (fixed or discretionary)
without losing government benefits. The various provincial rules are beyond the scope of this course.
26
See Québec (Curateur public) c. A.N. (Succession de), 2014 QCCS 616.
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These rules are covered in CETA 3. The key characteristics are that a spouse
(or common-law partner) of the settlor or deceased is exclusively entitled to
the trust income during the spouse’s lifetime and during the spouse’s lifetime
capital may only be distributed to the spouse.
 Alter ego trusts, joint spousal trusts and joint common- law partner
trusts: Similar to spousal trusts, these trusts meet very specific requirements
under the Income Tax Act. These trusts are inter vivos trusts and are most
often used when the settlor has reasons for ensuring that his or her estate does
not pass under a will. The rules for making these trusts and the taxation are
covered in CETA 3.
The key characteristics of these trusts are that the settlor must be 65 years or
older. If it is an alter ego trust, the settlor is the sole beneficiary until the
settlor’s death. Like a spousal trust, the settlor is exclusively entitled to the
income and is the only beneficiary entitled to capital during the settlor’s
lifetime. On the settlor’s death, the trust can be wound up or continue for other
beneficiaries.
If the trust is a joint spousal or joint common-law partner trust, the spouse or
common-law partner is also a beneficiary. The spouse or common-law partner
does not need to be 65. The trust can provide that either or both of the spouses
are exclusively entitled to receive the income, and either or both are the only
beneficiaries entitled to receive capital while they are living. The trust
continues until the survivor of the settlor and the spouse or common-law
partner dies. Upon the death of the survivor, the trust may be wound up or
continues as an inter vivos trust.
2.2.5.7 Common Law Only: Trusts Arising by Operation of Law –

Resulting Trusts
Trusts can also arise by operation of law. Sometimes they are referred to as implied
trusts. These trusts arise when there is no express intention to create a trust. In the
common law, there are two categories of trusts that are often identified as arising by
operation of law – resulting trusts and constructive trusts.
The most common example that arises in the context of an estate or trust administration is
the “resulting trust” and they are described here. Constructive trusts are discussed in
CETA 2.
Resulting trusts arise in situations where it might be said that there is an implied
intention to create a trust. Resulting trusts arise when one party (A) has acquired legal
title to an asset but the law determines that A is holding title on a resulting trust for the
original owner (B) and must return property to B. Resulting trusts arise in one of two
ways.
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1. Automatic resulting trust: An automatic resulting trust is one where

property or funds are held by one party and the law requires that the property
is held for the original owner.
Example: Andrea establishes an express trust and transfers investments to
Brian, as trustee, to hold on trust for Andrea’s daughter Carrie until Carrie
dies. When Carrie dies, the trust document instructs Brian to divide the
remainder among Carrie’s children. When Carrie dies, there are no children
and the trust does not give any further instructions. Brian cannot take the
property for himself. Rather, Brian holds the property on a resulting trust and
must return the property to Andrea if she is alive or to Andrea’s estate if
Andrea has died.
2. Presumption of resulting trust: The law also sets out certain situations
where A transfers legal title to property to B but the intention of the transfer is
not clear. Is it a gift? Is it a trust? Subject to certain exceptions, a transfer that
is not a gift or a transaction where B has paid A for the property, the laws
presumes that B is holding the property for A on a resulting trust and must
return it to A.
Example: A common example where the presumption of a resulting trust
arises when administering an estate is when a parent (Alfred) has made a
bank or investment account joint with right of survivorship with an adult child
(Charlie). Unless there is evidence that Alfred’s intention was for Charlie to
take the balance of the account on Alfred’s death, Charlie will become the
legal owner of the account according to the terms of the account agreement
but is deemed to hold the funds on a resulting trust for Alfred’s estate.27
2.2.5.8 Quebec Only: Trust Arising by Operation of Law

Although Quebec recognizes that trusts may arise by operation of law, this is outside of
the scope of this course.
Quebec students should note, however, that the common law recognizes two kinds of
trusts that arise by operation of law – the resulting trust and the constructive trust. The
CCQ does not recognize either of these concepts.
2.2.5.9 Trust Classification Diagram

The diagram (see Figure 2.1 Classification of Trust Diagram) illustrates the
classifications discussed above.28
27
Jointly owned accounts and other property are discussed further. See Chapter 3 at 3.7.6 Jointly Owned Property
and Chapter 5 at 5.5.1 Assets Owned Jointly.
28
This diagram has been adapted and reproduced from the STEP Canada diploma course Law of Trusts (chapter 2 at
II G, at p. 2). Statutory and constructive trusts have been shaded as they are not discussed in the Certificate in
Estate and Trust Administration courses.
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Figure 2.1: Classification of Trust Diagram

Common Law Jurisdictions Only
Trusts
Trusts by
Express Statutory
Operation of
Trusts Trusts
Law
Personal Purpose Resulting Constructive

Trusts Trusts Trusts Trusts
Non- Automatic Presumed

Inter Vivos Testamentary Charitable
Charitable Resulting Resulting
Trusts Trusts Trusts
Trusts Trusts Trusts
Fixed Interest Discretionary Fixed Interest Discretionary

Trusts Trusts Trusts Trusts
Quebec Only
2-24
2.2.6 Common Law Only: Four Requirements to Establish a Trust

In order to have a valid express trust for persons or purposes, there are four requirements.
1. The relevant parties to the trust must have capacity.
2. The three certainties must be present.
3. The trust must be constituted (e.g. property is transferred to the trustee).
4. The relevant formalities must be met.
Each of these is reviewed below.29
2.2.6.1 Capacity of the Relevant Parties

For purposes of this rule, there are three relevant parties: the settlor, the trustee, and the
beneficiary(ies). Each is reviewed below.
 The Settlor: Generally, a person who owns property is free to deal with that
property and may create an inter vivos or testamentary trust. The settlor must
have reached the age of majority and must have the required mental capacity
to create the trust.30 Other laws or agreements may prohibit a person from
settling some or all of the settlor’s assets on a trust. For example, in some
jurisdictions family and/or succession laws may prevent the transfer of certain
assets to a trust.
 The Trustee: It is not necessary in law for the trustee to have legal capacity.
However, a trustee often needs to deal with the trust property and will have
limited ability to do so if the trustee does not have legal capacity. Legal
capacity refers to being of the age of majority and/or having the mental
capacity to manage financial affairs. If a trustee lacks legal capacity it may be
necessary to replace the trustee. If the trustee is a corporation, it must be
authorized to act as a trustee.31 Companies can be trustees, but companies that
offer trustee services to the public are subject to federal and/or provincial
legislation. They are referred to in this course as “corporate trustees”.
 Beneficiaries: Beneficiaries do not need to be age of majority or mentally
capable. Indeed, many trusts are created to provide for minors and incapable
29
For a more in-depth discussion of these requirements see Waters at chapters 4 through 6 and Oosterhoff at chapter
4.
30
When the settlor is making a gift to an inter vivos trust, the settlor will be capable of making the gift if he or she
understands the nature and effect of the transaction he or she is entering into. See Royal Trust Co. v. Diamant,
[1973] 3 D.L.R. 102 (B.C.S.C.) at p. 111. The test for capacity testamentary trust is similar but one must consider
the test of capacity to make a will which has additional criteria (for a discussion, see Chapter 3, The Law of Wills).
See Ouderkirk v. Ouderkirk, [1936] S.C.R. 619, at 621, [1936] 2 D.L.R. 417 at p. 418.
31
Note that a company can only be a trustee if authorized to do so by law and in its constating documents and any
relevant legislation. Generally, only provincially or federally regulated trust companies are authorized to offer trust
services to the public. Some provinces allow private companies to be trustees, but they cannot offer services to the
public. Unincorporated associations are not legal entities and accordingly cannot be appointed as a trustee.
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adults. Beneficiaries may also be legal entities. Trusts that are for purposes are
subject to special rules.32
2.2.6.2 The Three Certainties

In order to have a valid express trust, the three certainties must be satisfied.33
1. Certainty of Intention: There must be sufficient certainty that the settlor
intended to create a trust. Intention may be implied by the circumstances or
conduct. Often an express trust uses words such as “on trust”. However, the
mere use of the words “on trust” may not be sufficient. There must be an
intention to transfer property to a trustee, to hold title to and manage that
property for the benefit of the beneficiary. And, the beneficiary(ies) must have
the exclusive enjoyment of the property. The settlor retains no personal
control or enjoyment of the property.
2. Certainty of Subject Matter: There must be sufficient certainty as to the
subject matter of the trust. This includes certainty of the property that is to be
held on trust and, where the trust is for the benefit of persons, certainty of the
interests in that property that the beneficiaries are to receive. Sometimes this
is referred to as “certainty of property”.
3. Certainty of Objects: In the case of a trust for the benefit of persons this
requires certainty of the beneficiaries. In the case of a trust for purposes it
requires that the purposes of the trust be sufficiently certain.
If any one or more of the certainties is missing, there is no trust. An example of each
follows.
Example 1: No certainty of intention: Alice’s will states, “I transfer $50,000 to Brenda,
it being my wish that she use the funds to assist her niece Claire with her education.”
There appears to be certainty of objects (Claire) as well as subject matter (the sum of
$50,000). However, it is not clear whether Brenda is to hold the funds on trust for Claire
and use the funds for her education, or if the gift is an outright gift to Brenda with an
expression of a wish as to what Brenda will do with the money. A court may be required
to determine, based on all of the facts, the terms upon which Brenda has received the
property. If Brenda received the funds as a gift, there is no trust and Claire has no
enforceable rights.
Example 2: No certainty of subject matter: Ali signs a trust document appointing
Barack as trustee and identifying Cecil and Des as beneficiaries. However, the trust
document does not identify any property to be transferred to the trust. Although it is
32
Trust provisions for certain beneficiaries may also violate legal rules or public policy. These rules, and the rules
governing trusts for these purposes, are discussed in the Advanced Topics in Estate and Trust Administration
course.
33
Knight v. Knight (1840), 3 Beav. 148, 49 E.R. 58 (Eng. Ch. D.) affirmed (sub nom. Knight v. Boughton) 8 E.R.
1195.
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possible to settle the trust with a nominal sum of money or an asset (including a gold
coin) and indicate that additional property will be added at a later time, the trust
document must identify the property or subject matter that is to be transferred to the
trustee in order to constitute the trust (see below). Barack has received no assets, so
there is no trust to enforce.
Example 3: No certainty of objects: Arnold transfers his portfolio of stocks at ABC
Investment Company to Ben to hold on trust. The words “on trust” suggest a certainty of
intention. The subject matter – the stocks and bonds at a specified account – also appear
to be certain. However, the objects or purposes are not identified. Therefore, Ben will
hold the stocks on a resulting trust for Arnold. (For discussion about resulting trusts, see
22 Common Law Only: Trusts Arising by Operation of Law – Resulting Trusts.)
As the examples above illustrate, although the three certainties appear easy to define and
recognize on the face, language can be missing. Language can also be unclear and
questions can arise. The law in this area that helps interpret whether or not one of the
three certainties has been met is beyond the scope of this course. (See CETA 2.)
2.2.6.3 Constituting the Trust – Transferring the Assets

Until the assets have been transferred to the trustee, the beneficiary has no right to
enforce the trust and the settlor is not obliged to create the trust.34 The trust has not been
“constituted”. In order for a trust to exist, the assets must be transferred to the trustee.
2.2.6.4 Compliance with the Formalities

Students who work for corporate trustees or who are advising trustees will generally only
deal with trustees appointed in an express trust, evidenced in writing. The two most
common ways are in a trust deed, or in a will.35 (See sample will and sample trust in
Student Resources.)
Depending on how a trust is created, different formalities must be met. Generally, for an
inter vivos trust these will be met when the settlor and trustee(s) have signed the trust
document before witnesses. The settlor and trustee(s) do not need to sign at the same
time.
When a trust is created in a will, it must comply with the statutory requirements for
making a valid will according to the laws of the jurisdiction where it is made.36
2.2.7 Quebec Only: Requirements to Establish a Trust

The requirements to establish a trust under the CCQ are set out above (see 2.2.2.3 Four Essential
Elements of a Quebec Trust). They are:
34
Oosterhoff at p. 245.
35
Common Law Only: A settlor may also sign a declaration of trust, stating that the settlor is holding property on
trust for others, or specified purposes. These are less common in Canada and are not reviewed in this course.
36
See Chapter 3 The Law of Wills for the formal requirements to make a will.
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 the settlor must transfer property from his or her patrimony,

 to an autonomous and distinct patrimony constituted by the settlor,
 which the settlor appropriated to a particular purpose, and
 a trustee undertakes, by his or her acceptance, to hold and administer the property.
If these four elements are satisfied, there is a trust. Note that article 1264 CCQ provides that if
there is more than one trustee named, only one must accept the appointment for the trust to be
constituted.
When the trustee accepts the trust, the settlor no longer owns the property and charges the trustee
with seeing to the appropriation of the property and the administration of the trust patrimony.
Acceptance also establishes the beneficiary’s rights (art. 1265 CCQ).
Although the “three certainties” concept is not part of Quebec civil law of trusts, the
requirements in the CCQ contain the essence of the three certainty requirements in the common
law:
1. certainty of intention to create a trust (e.g. a trustee is to hold the property for a
particular purpose; the property is not being transferred to the trustee as an outright
gift);
2. certainty of subject matter (e.g. there must be property specifically identified to be
transferred); and
3. certainty of objects (e.g. the beneficiaries must be capable of being determined and/or
the purpose must be clear).
The common law also requires that the settlor constitute the trust by actually transferring the
property. However, if the trustee did not accept the property, an alternate could be appointed
according to the terms of the trust or if necessary by the court. The CCQ also provides for
replacements to be appointed and for the court to appoint trustees as a last resort or default
measure (arts. 1276 and 1277 CCQ).
2.2.8 Choosing a Trustee

Although any capable adult or authorized legal entity can be appointed as a trustee, the settlor
will want to choose someone who has the time and skill required to administer the trust. The
settlor can be the trustee or one of the trustees.37 The settlor may also be a beneficiary of the
trust. However, the settlor cannot be the only trustee and only beneficiary of the trust. When the
settlor is a trustee, all of the duties and responsibilities apply. When the settlor is a beneficiary,
the settlor’s rights are as a beneficiary and not as the legal owner prior to the trust’s creation.
Quebec Only: As noted above, if the settlor or a beneficiary is the trustee, there must be at least
one independent trustee (art. 1275 CCQ).
37
For further discussion on factors to consider see 2.7 Choosing a Fiduciary and Accepting a Fiduciary
Appointment.
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2.2.9 Accepting the Appointment as Trustee

A trustee does not have to accept the appointment. A trustee’s appointment is confirmed in a
number of ways, depending on how the trust is created.
2.2.9.1 Common Law Only: Accepting the Appointment

The acceptance of an express inter vivos trust evidenced in writing occurs when the
document is signed and witnessed by the settlor and the trustee and the assets have been
transferred to the trustee. (See 2.2.6.3 Constituting the Trust – Transferring the Assets.)
A will with a testamentary trust often appoints the same person(s) as executor(s) and
trustee(s). Therefore, when the person applies for probate he or she is also accepting the
appointment as trustee unless it is renounced at the time of the application. The trustee
may also confirm acceptance when the trust property is transferred from the executor to
the trustee.38
2.2.9.2 Quebec Only: Accepting the Appointment

There is no requirement as to the form of a trustee’s acceptance. However, it is becoming
increasingly common for one party to be appointed executor to administer the estate, and
for another (e.g. a corporate trustee) to be appointed as trustee.
Article 618 CCQ specifically notes that a trustee may receive a legacy intended for a trust
or to be used to accomplish the object of the trust. When the liquidation of the estate is
over, the liquidator is discharged by rendering an account and publishing a notice of
closure of account in the Register of Personal and Movable Real Rights (RDPRM). The
liquidator then delivers the property to those entitled (art. 776 CCQ), for example, the
trustee (art. 618 CCQ). The rules for rendering accounts are addressed in a later chapter
(see Chapter 10 Estate and Trust Accounts).
2.2.10 Trustee Duties
2.2.10.1 Introduction
The duties and powers of trustees are central to the administration of a trust. A trust duty
is something the trustee is legally obliged to do, or prohibited from doing. A power
provides the trustee with the authority required to carry out a duty.
A trustee is appointed to carry out a number of duties. This means that the appointment is
personal, and subject to certain exceptions, the trustee may not delegate the trustee’s
authority to make decisions or administer the trust.
In addition, the trustee has a duty to be loyal to the beneficiaries. This requires the trustee
to act only in the best interests of the beneficiaries and to not have a conflict of interest.
38
Waters at pp. 883-884.
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When administering the trust and carrying out the trustee’s duties, the trustee has a duty
to be impartial and to not favour one beneficiary or group of beneficiaries over another.
Finally, a trustee has a duty to provide information about the trust to the beneficiaries or
others entitled to enforce the trust.
A trust document can modify many of these duties. For example, in a discretionary trust,
the trust may explicitly state that the trustee does not need to be impartial and may give
specific instruction to give priority to one beneficiary. A trust document may also permit
certain conflicts of interest. Legislation in each jurisdiction may have also modified some
duties. For example, a trustee can usually delegate investment management where it is
appropriate and prudent to do so.
Each duty is described briefly below and will be explored further in CETA 2.
2.2.10.2 Overriding Duty of Care

Generally, a trustee has a duty to act honestly and in good faith and must comply with the
terms of the trust instrument.
Common Law Only: When carrying out the trustee’s duties, the trustee must exercise
the standard of care that a person of ordinary prudence would use in managing his or
her own affairs.39
Quebec Only: Trustee duties are set out in article 1309 CCQ. It states that an
administrator shall act with prudence and diligence and that he or she shall act honestly
and faithfully in the best interest of the beneficiary or the object pursued. The CCQ also
clarifies the obligations when the administrator has simple administration and full
administration.
 Administrators with simple administration of the property of others (e.g.
liquidators and tutors) shall perform the acts necessary to preserve (protect) the
property or to maintain the property (art. 1301 CCQ). The administrator must
collect the fruits and revenues and collect debts (art. 1302 CCQ) and, unless
authorized, the property may not be sold (arts. 1303-1305 CCQ). When investing,
the administrator is limited to presumed sound investments (arts. 1305, 1339-
1344 CCQ).
 Administrators with full administration of the property of others (e.g. trustees and
curators) must preserve the property and make it productive (art. 1306 CCQ).
Article 1307 CCQ gives the trustee broad powers to carry out these duties.
39
Fales v. Canada Permanent Trust Co. (1976), [1977] 2 S.C.R. 302, 70 D.L.R. (3d) 257. Note that it is beyond the
scope of this course to review the legal commentary on how to apply this rule to both lay trustees and professional
trustees. For further discussion, see the Advanced Topics in Estate and Trust Administration course and the
discussion Waters at pp. 974-980 and Oosterhoff at p. 146.
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2.2.10.3 Duty Not to Delegate

The general rule is that trustees cannot delegate the tasks they are required to perform
under the trust. A settlor is assumed to have appointed the particular person as trustee
because the settlor trusted that person to do what was required to carry out the terms of
the trust.
Common Law Only: The rule also applies when there is more than one trustee – one
trustee may not delegate to the other(s).
There are four exceptions to the prohibition on delegation.
1. The trust document permits delegation.
2. Legislation permits delegation for certain activities.
3. The trustee may delegate tasks to agents where it is normal practice for a
reasonably prudent person carrying out the task to do so.
4. The trustee may delegate purely administerial tasks – those tasks that do not
require the exercise of the trustee’s judgement.
If a trustee decides to delegate a duty or task, a trustee has a duty to delegate prudently.
This means that the trustee must select an agent who is qualified and has the expertise to
carry out the task(s) required. The trustee must supervise the agent to ensure the agent is
carrying out the duties in accordance with the terms of the appointment and the fees
charged must be reasonable. Other considerations and precautions may be relevant
depending on the circumstances.
Quebec Only: Delegation is addressed at article 1337 CCQ under “Administration of
the Property of Others”. Although article 1337 CCQ is not an absolute prohibition to
delegate, it sets parameters for accountability when a trustee delegates to another. With
respect to trustees this means that:
1. a trustee may delegate duties or be represented by a third party for a specific act;
2. a trustee may not delegate generally the conduct of the administration to a third
party;
3. a trustee may not delegate the exercise of a discretionary power to a third party;
4. a trustee may delegate the conduct of the administration or exercise of a
discretionary power to a co-trustee;
5. where a trustee delegates, he or she is accountable for the person selected if the
trustee was not authorized to make the selection; and
6. where the trustee is authorized to delegate, he or she is only accountable for the
care with which the trustee selected the person and gave him or her instructions.
2.2.10.4 Duty of Loyalty (No Conflict of Interest)

Common Law Only: Trustees must administer the trust in a way that is in the best
interests of the beneficiaries. This means that trustees must disregard their own interests,
or the interests of others to whom they owe fiduciary duties. A conflict of interest is not
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permitted. The trustee must consider only those factors that are directly relevant to the
trustee’s exercise of discretion in the best interests of the beneficiaries. For example, a
trustee is not permitted, directly or indirectly, to purchase property from a trust. Neither
is a trustee permitted to sell property in which the trustee has an interest to the trust, or
to hire the trustee or a trustee’s business to provide services to the trust, including
investment or other professional services. If the trustee breaches this duty, the
transaction may be set aside and/or the trustee may be liable to account for any benefit
or profit obtained as a result of the transaction.
This duty is strictly enforced. If a settlor wishes to permit a conflict of interest, the trust
document must specifically permit the conflict of interest.
Quebec Only: A trustee’s obligations towards the beneficiary, including conflict of
interest rules, are set out at articles 1308 to 1318 CCQ. A trustee may not place him- or
herself in a position where his or her own interests would conflict with his or her
obligations towards the beneficiaries. If the trustee is also a beneficiary, the trustee must
act in the common interest (art. 1310 CCQ). The trustee must declare to the beneficiaries
any conflict of interest (art. 1311 CCQ). The trustee may not become party to a contract
affecting the trust property (art. 1312 CCQ).
As in the common law, the trust deed may specifically permit some forms of conflict of
interest.
Article 1366 CCQ deals with the trustee’s accountability for any unauthorized personal
profit or benefit.
2.2.10.5 Duty of Impartiality

The duty of impartiality (or “even-handedness”) requires the trustee to treat all
beneficiaries fairly and to not favour any one or more beneficiaries over others. This duty
arises in many contexts of an administration when there are different interests. For
example, when one beneficiary or group of beneficiaries is entitled to income and another
group is entitled to the capital on the income beneficiary’s death, when selecting
investments the trustee must ensure that sufficient income is generated for the income
beneficiary while at the same time ensuring that the capital will grow for future
beneficiaries.
Decisions may also be required as to whether expenses should be paid from the capital of
the trust or the income that is earned. Another common situation that arises is when the
trustee has discretion to pay income or capital to one or more beneficiaries. While
beneficiaries do not have to be treated equally, the trustee must be impartial and may not
favour one beneficiary over another when making the decisions as to who should receive
funds, how much, or when. Many more examples could be provided. This duty is
examined in more detail throughout this course and the CETA 2 course.
Quebec Only: The impartiality rule is found in article 1317 CCQ which states that
failing sufficient indication expressed in the constituting act, the apportionment of profit
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and expenditure between beneficiaries of the fruits and revenue and capital beneficiary is
made as equitably as possible taking into account the object of the trust, and in
accordance with articles 1345 to 1350 CCQ. Where a trustee is governed by the rules of
simple administration, he or she is bound to choose investments so far as possible to
work toward a diversified portfolio producing fixed income and variable revenues (art.
1340 CCQ).
2.2.10.6 Duty to Account (Provide Information)

Trustees have a duty to provide information to beneficiaries. Beneficiaries are entitled to
know that the trust exists and the nature of their interest. They are also entitled to receive
the trustee’s accounts of the administration. The accounts include a summary of the
original assets and all purchases, sales, receipts, expenses, and distributions.
While a beneficiary does not have the right to control the management of the trust assets,
the beneficiary has a right to enforce the terms of the trust. This means that beneficiaries
must have information about the terms of the trust and must be able to inspect the
accounts in order to satisfy themselves that the trustee is complying with the terms of the
trust. For a review of the details of this duty, see Chapter 10 Estate and Trust Accounts.
Quebec Only: The general rules for administrators with respect to the preparation and
delivery of the inventory are found at articles 1326-1330 CCQ. Rules with respect to
annual accounts are found at articles 1351-1354 CCQ. The rules for final accounts are
found at articles 1363-1364 CCQ. In addition, articles 1287-1288 CCQ provide that in
respect of a trust, the administration is subject to the supervision of the settlor, or the
settlor’s heirs, and the beneficiaries and that they are entitled to the accounts and to
examine trust records. These rules are explored in more detail later in this course (see
Chapter 10 Estate and Trust Accounts). A corollary to the duty to account is that the
trustee must not mingle the trust assets with the trustee’s own assets. This ensures that the
trust assets are always segregated and identifiable. It also ensures that they cannot be
seized by the trustee’s creditors.
Quebec Only: This rule is found at article 1313 CCQ.
2.2.11 Trustee Powers

A trust power gives the trustee authority to make decisions or take certain actions in order to
administer the trust. For example, most trust documents set out detailed investment powers. If
the trust property includes a building, the trustee may be given a power to arrange for repairs of
the building, purchase insurance, sell the property, or use the property as security for a loan.
Another important power in most trusts is the power to decide who is entitled to receive
distributions from the trust income and/or capital and when.
Trustee powers are found in the trust document. However, if the trust is silent on certain powers,
legislation provides a number of default powers in order to assist a trustee with the
administration of the trust. Examples of two important powers that are addressed in Canadian
2-33
Trustee Act legislation and the CCQ include the power to invest and the power to insure
property.
2.2.12 Trustee Duties and Powers and the Administration of a Trust

Trustee duties and powers can overlap. If, for example, the trust property consists of stocks and
bonds, the trustee’s duty to act prudently would normally require the trustee to keep the property
invested so that it generates income and/or growth. The investment powers authorize the trustee
to sell and reinvest, and often set out the scope of permissible investments and any restrictions.
When there is a power to determine who should receive income or capital, the trustee has a duty
to consider whether or not and how to exercise that power.
Duties and powers are central to the administration of a trust because they set out not only what
the trustee is obliged to do but also what the trustee is permitted to do when administering the
trust. Failure to comply with the duties or the improper exercise of a power may lead to a loss
and trustee liability to the trust. Failure to comply with some duties may also lead to a trustee
being removed.
Duties and powers permeate all aspects of the administration of trusts and estates and the
management of the affairs of an incapable person. They will be referred to throughout this
course. Duties and powers will also be examined in more detail in CETA 2.
2.3 PERSONAL REPRESENTATIVES (EXECUTORS AND

ADMINISTRATORS; LIQUIDATORS IN QUEBEC)
2.3.1 What Is a Will?
A will is a document that disposes of a person’s property (“estate”) on that person’s death. A will
can be revoked or amended before death.40 If a person dies having made a valid will he or she is
said to die “testate”. Every province and territory has legislation that sets out the requirements
for making a valid will. To review these requirements, see Chapter 3 The Law of Wills.
2.3.1.1 Terminology for Maker of a Will

The person who makes a will is called a testator (male) or testatrix (female).
British Columbia: A testator is called a will-maker.
For purposes of this course, the term “testator” will be used for all individuals who make
a will.
2.3.1.2 When There Is No Will

If a person dies without a will, the person is said to die “intestate”. When someone dies
intestate, provincial and territorial legislation sets out:
40
Common Law Only: Sometimes a will is called a “testament” and the will itself may state, “This is my last will
and testament.”
2-34
 who the estate administration falls to by law and/or who may apply to administer
the estate and
 how to distribute the estate in these circumstances.
For a discussion on the rules about who can apply to administer the estate, how they are
appointed, and the rules for how the estate is distributed, see Chapter 4 Initial Stages of
an Administration. For the distribution rules, see Chapter 7 Estate Beneficiaries.
2.3.2 Personal Representatives (“Liquidators” in Quebec)

A personal representative is a general term to describe the person who administers the estate of a
deceased person. It includes executors and administrators, and liquidators in Quebec.
For purposes of this course, unless the context requires specific terminology, all personal
representatives will be referred to as executors.
2.3.2.1 When There Is a Will (Executor)

A will appoints someone to administer the estate. More than one person can be appointed.
The person appointed is called an “executor” (male) or “executrix” (female).
Ontario: An executor is called an “estate trustee with a will”.
Quebec: The executor is called a “liquidator”.
For purposes of this course, the term “executor” will be used for all individuals
(including corporate trustees) appointed in a will to administer an estate.
Common Law Only: A person does not need to accept the appointment as executor, but
once it is accepted, court approval is usually required if the executor wishes to resign.
Quebec Only: In Quebec, no person is bound to accept the office of liquidator unless he
or she is the sole heir (art. 784 CCQ). Court approval is not required for resignation or
to refuse the appointment as liquidator.
2.3.2.2 When There Is No Will or There Is No Executor

Common Law Only: If there is no will, or an executor dies or is unable or unwilling to
act, an administrator must be appointed by the court unless there is a will that appoints
an alternate executor.
Quebec Only: In the absence of a will or a named liquidator, the office of liquidator
devolves by operation of law to the heirs (art. 785 CCQ). The liquidator is responsible
for administering the estate in accordance with the applicable legislation, or if there is a
will, in accordance with the terms of the will.
Ontario: An administrator is called an “estate trustee without a will”.
Quebec: Whether or not there is a will, the person or trust company appointed to
administer an estate is called a “liquidator”.
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This course will use the term “administrator” for any person or corporate trustee
appointed to administer an estate where there is no will, or the named executor is unable
to act.
2.3.3 Personal Representative Responsibilities

The personal representative is responsible for administering the estate. The personal
representative’s role and responsibilities include:
 Funeral arrangements:
o Common Law Only: attending to funeral arrangements and disposition of
the body;
o Quebec Only: heirs and successors have the obligation to attend to funeral
arrangements and disposition of the body unless the will indicates otherwise
(see art. 42 CCQ);
 identifying and locating the estate beneficiaries;
 locating, valuing, and collecting assets, including debts owed to the deceased;
 safeguarding assets pending distribution;
 identifying and settling all debts and liabilities, including final income tax
obligations;
 settling spousal claims under family law legislation;
 settling spouse and dependant support claims;
 paying funeral, legal, and testamentary (estate) expenses;
 keeping accounts; and
 distributing the assets in accordance to the terms of the will, as required under
intestacy rules, or as ordered by the court if there has been an action to vary the terms
of the will or intestacy distribution.
As with a trust, if a will does not deal with a specific circumstance or there is no will, legislation
provides default rules for administering the estate and identifying beneficiaries.
2.3.3.1 Common Law Only: Appointment of the Personal Representative

The personal representative steps into the shoes of the deceased person. Legal title to the
deceased’s assets is transferred (or transmitted) once the personal representative’s
authority is confirmed.
An executor’s authority under a will begins on death. In most cases an executor will need
to obtain a grant of probate of the will. If there is no will, or the executor named in the
will is unable to act, an administrator must be appointed by the court and the
administrator’s authority only begins once appointed.
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The grant of probate or grant of administration confirms to third parties that the executor
or administrator is the legally authorized party to deal with the deceased’s estate.
2.3.3.2 Quebec Only: Appointment of the Liquidator

If the deceased died leaving a notarial will, the liquidator may act upon receipt of a
certified copy of the will and verification that it is the last will by conducting a will
search.
If the will is not in notarial form, the liquidator begins acting once probate has been
granted.
If the liquidator named is not able to accept and there is no alternate or there is no will,
the heirs (beneficiaries under the will or intestate heirs who will take the estate) may
agree to act or a majority of them may authorize a person or corporate trustee to be the
liquidator. This is evidenced by the publication of the designation of liquidator in the
Register of Personal and Movable Real Rights (the RDPRM). If the heirs cannot agree,
the court will appoint a liquidator. The authority to act only begins once the appointment
has been made.
2.3.4 Personal Representatives versus Trustees

The duties that apply to a trustee (for review see 2.2.10 Trustee Duties) also apply to
personal reprsentatives.
Trustees and personal representatives also have similar responsibilities – they manage
and deal with assets; they distribute assets and funds to beneficiaries; they are required to
account to the beneficiaries; and they are entitled to compensation under legislation.
If a will creates a trust, the executor is usually also named as the trustee of the assets that
will be held in trust once the estate has been administered. As a result, the line between
the roles can become blurred as the executor winds up the estate administration
responsibilities and tax reporting obligations, and begins to manage the trust.
However, the roles are distinct and different rules apply in certain circumstances. The
executor needs to be alert to when the role changes.
Common Law Only: Examples of when the distinction applies include situations where:
 an executor or trustee wishes to resign,
 beneficiaries want to replace an executor or trustee,
 an executor or trustee dies before the administration is complete,
 a beneficiary wishes to enforce payment of his or her interest,
 there is more than one executor or trustee and decisions must be made, or
 there is a distribution to a foreign beneficiary who must report the distribution for
tax purposes.
Quebec Only: As noted above, the CCQ provides that liquidators are governed by the
rules of simple administration and trustees are subject to the rules for full administration
2-37
unless otherwise provided. Examples of when the distinction applies include situations
where:
 investment decisions are required to sell assets, purchase new assets, or set an
investment strategy;
 making decisions when there is more than one liquidator or trustee;41 or
 decisions related to the sale of property are required.
Generally, once the personal representative administers the estate (i.e. collects assets,
pays all debts and taxes, prepares a final accounting, and delivers the property to the
beneficiaries), the administration is complete. If the personal representative is an executor
appointed under a will and is the same person(s) named as trustee, the executor(s) now
holds the trust property as trustee, and the laws that apply to trusts and trustees now
apply.42
2.4 AGENTS
2.4.1 Introduction to the Law of Agency
An agency relationship arises when one person, the “principal”, appoints another person or entity
to be the principal’s “agent” to carry out certain transactions, or make certain decisions, on the
principal’s behalf. An agent generally has authority to affect the principal’s legal relations with
others.43
Common Law Only: Other terminology that may be used for a principal and an agent,
depending on the nature of the agency relationship, include “donor” and “donee”, or “grantor”
and “grantee”.
Quebec Only: An agency appointment is referred to as a mandate. The person giving the
mandate is called a mandator. The person accepting (because it is a contract) the mandate and
agreeing to comply with its terms is called a mandatary and acts on behalf of (or “represents”)
the mandator.
2.4.1.1 Types of Agency Relationships

There is a broad range of agency relationships that an individual might enter into during
his or her lifetime. Most agency relationships should be documented in writing to ensure
that the role and scope of authority of the agent are clear. In some cases they are required
to be in writing.
41
Unless provided otherwise in the will or trust, liquidators must act unanimously; trustees act by majority.
42
Some executors may choose to transfer the assets to a new account to make the change in roles clear. However,
the court will look at the circumstances and consider whether the administration is complete. See Singer v. Singer
Estate, 2000 ABQB 944 (CanLII) affirmed 2002 ABCA 294 (CanLII); Re McLean (1982), 37 O.R. (2d) 164, 11
E.T.R. 293, 135 D.L.R. (3d) 667 (H.C.J.); and Booty v. Hutton (1999), 140 Man.R. (2d) 186, 30 E.T.R. (2d) 159,
[2000] 1 W.W.R. 81 (Q.B.).
43
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Quebec Only: The law permits verbal mandates.

Examples of agency relationships include:
 hiring a realtor to list a house for sale,
 hiring an accountant to prepare tax returns and correspond with the Canada
Revenue Agency (and, in Quebec, the Quebec Revenue Agency),
 hiring an investment manager to manage investments,
 hiring a lawyer to assist with the administration of an estate,
 hiring a trust company to carry out many of the administrative tasks of an
estate administration (agent for executor), and
 giving someone authority in a power of attorney to make decisions on behalf
of the principal for a period of time (e.g. while on vacation or otherwise
unavailable) or in respect of certain financial matters (e.g. attending to
banking, bill payments and/or investments or to deal with a specific situation
such as the listing and sale of a property when the principal is unavailable).
In each of these situations, the principal has given the agent specific authority to make
decisions and enter binding contracts or financial commitments on behalf of the principal
in very specific circumstances. A contract, agreement, other document or the law sets out
the agent’s responsibilities and the scope of authority granted. It may also set out the
principal’s responsibilities and the agent’s entitlement to compensation and
reimbursement for expenses. The principal remains the owner of the assets and will
supervise and hold the agent to account if the agent fails to comply with the agreed terms
or fails to make decisions in the principal’s best interest.
Agency relationships also arise when the agent is appointed to make decisions on behalf
of a person who is incapable, for example, under an enduring or continuing power of
attorney (common law jurisdictions) or, in Quebec, a protection mandate. There are a
number of other names for these types of appointments. These types of agents have a
unique fiduciary role and are collectively referred to as substitute decision-makers. For a
discussion of the roles, and other court appointed substitute decision-makers, see 2.5
Substitute Decision-Makers.
2.4.2 Responsibilities of an Agent

The duty of an agent is to comply with the terms of the appointment. The agent must report to
the principal. Only the principal has a right to hold the agent to account and sue for failure to
comply with the duties and obligations set out in the agreement and any losses that are incurred
as a result. In situations such as those identified above, the agent will be subject to the core duties
that apply to a trustee where applicable and as modified by the document appointing the agent.
2.4.2.1 Agent for Executor

Many corporate trustees now offer an agent for executor service. Each service must be
reviewed to determine what the trust company has been hired to do. Services could range
from carrying out only a few specific administration tasks to attending to all of the
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administration activities, including reporting to beneficiaries. The executor may attend to

some activities, including reporting to beneficiaries, or the executor may limit his or her
involvement to supervising the agent and making the decisions that cannot be delegated.
2.4.3 Trustee Versus Agent

Although agency relationships differ from trust relationships, the similarities and
distinctions are worth noting. Agents and trustees both have duties to others. Therefore,
like a trustee, an agent has fiduciary duties and responsibilities – both must act honestly
and in good faith; they may only use their powers for the purpose that they were granted,
they cannot have a conflict of interest; and they must account for their actions. However,
unlike the agent who must report to the principal, trustees owe fiduciary duties to the
beneficiaries of the trust, not the settlor, and the beneficiaries enforce the trust.
Quebec Only: Note that the settlor, or his or her heirs or an interested person (art. 1290
CCQ) also have the right to supervise the administration of a trust (arts. 1288-1290
CCQ).
The table below (see Figure 2.2 Common Law Only: Trust and Agency Compared) identifies
and summarizes the differences between the two roles. For the Quebec version, see Figure 2.3
Quebec Only: Trust and Mandate Compared.
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Figure 2.2: Common Law Only: Trust and Agency Compared

Feature Trust* Agency*
Fiduciary role  Trustee  Agent
Source of  Refer to terms of the trust and relevant  Refer to contract or
Authority legislation and laws appointment
 Note: the trustee does not act on instructions  Seek direction from
of settlor or beneficiaries principal
Legal title  The trustee has legal title/ownership of the  The principal retains legal
assets but assets must be kept separate from title/ownership of the
trustee’s own assets assets
Beneficial title  The beneficiaries have beneficial  The principal retains
title/ownership (right to use/enjoy) beneficial ownership
Enforcement  The trust is enforced by the beneficiaries  The principal enforces the
agency agreement if
capable. Otherwise
interested persons may be
able to apply to court
Modification  The trust cannot be modified unless the  The agent and principal
settlor retains the power to modify it, the trust can modify the agreement
provides for modification, or the law permits a
variation, usually approved by the court
Termination  The trust ends according to the terms of the  Subject to terms of the
trust or if permitted under the law or agreement, the principal or
authorized by the court the agent can end the
agency relationship
Death or  The trust continues if a trustee dies or  An agency terminates on
incapacity becomes incapable the death or incapacity of
 The death or incapacity of the settlor does the principal or the agent
not affect the trust
Acceptance  A trust can arise without the acceptance of a  An agent must agree to the
named trustee. If the named trustee refuses appointment
or is unable to act, the trust will not fail
Liability to third  The trustee contracts with third parties When an agent enters a
parties personally. If any liability arises, the trustee transaction the principal is
may be reimbursed from the trust if the the party to the transaction,
44
trustee’s actions were authorized not the agent
 The settlor and the beneficiaries are not  The principal may also be
liable for the trustee’s actions liable for an agent even if
the agent’s actions, in
some situations, exceed his
45
or her authority
* Note: these are general rules. They may be modified by the trust or agency agreement, and may be
46
subject to legislation or case law that further modifies these basic rules.
44
45
46
For further information on how trusts differ from agency relationships and other legal arrangements, see
Oosterhoff, at chapter 2 and Waters, at chapter 3.
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Figure 2.3: Quebec Only: Trust and Mandate Compared

Feature Trust Mandate
Fiduciary role  Trustee  Mandatary
Source of  Trust deed or will and the law  Mandate and the law
Authority
Legal title  Trustee has legal title of assets which  The mandator retains title/ownership
must be kept separate from trustee’s
own property
Beneficial title  The beneficiaries have a personal right  The mandator retains ownership
to obtain a benefit or payment of
revenue or income, as the case may be
Enforcement  Trust is enforced by beneficiaries and  The mandator enforces the mandate if
supervised by settlor or his or her heirs, capable to do so. No formal process if
and any interested person (arts.1284 incapable
and 1290 CCQ)
Modification  The court can modify the terms of a  If capable, the mandator may modify
trust if new measures are required the mandate with the consent of the
(art.1294, para. 2 CCQ) mandatary
Termination  A trust is terminated by the terms of the  The mandator or mandatary may
trust, by operation of law, or by court terminate the mandate, or it may
order (arts.1294 and 1296 CCQ) terminate by the death of either party,
by extinction of the power or by
operation of law. A protection
mandate will also terminate if the
court ascertains that the mandator
has regained capacity
Death or  The death or incapacity of the settlor or  A mandate terminates on the death of
incapacity a trustee will not terminate the trust the mandator. The death or incapacity
of the mandatary will not terminate the
mandate if a replacement is named
Acceptance  Constitution of the trust is dependent on  The mandatary must agree to the
acceptance by one of the trustees appointment
(art.1264 CCQ)
Liability to  The trustee contracts with third parties  The mandatary who has acted in the
third parties in his or her capacity as trustee mandator’s name within the limits of
the mandate is not liable to third
 The settlors and beneficiaries are not parties with whom he or she
liable for the trustee’s actions if he or contracts. The mandatary is liable if
she exceeded his or her mandate, he or she contracts in his or her own
unless they participated in fraud name (art. 2157 CCQ)
(art.1292 CCQ)
 A mandatary who exceeds his or her
powers is personally liable to third
parties unless the mandator ratified
the act or the third party was aware of
the mandate (art. 2158 CCQ)
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2.5 SUBSTITUTE DECISION-MAKERS

2.5.1 What Is a Substitute Decision-maker?
“Substitute decision-maker” is a term used to describe a person who has authority to make
decisions for an adult who is not mentally capable of making decisions in one or more decision-
making areas (i.e. financial and legal decisions, personal care decisions, and health care
decisions). Substitute decision-makers are appointed in one of two ways.
 The adult, while mentally capable, appoints the person who the adult wants to make
decisions in accordance with provincial laws in a document that complies with
provincial or territorial laws.
 The court appoints a guardian to make financial, personal, and/or health care
decisions. (For the different names, see Figure 2.5 Substitute Decision-makers by
Jurisdiction.)
The scope of authority for each substitute decision-maker is sometimes limited to either,
financial and legal decision-making, or personal and health care decisions.
Each province has its own rules for the different roles. They also have their own terminology.
The definitions below (see 2.5.2 Financial and Legal Decision-makers and 2.5.3 Personal and
Health Care Decision-makers) describe each role generally. The terminology used in each
description is the terminology that will be used in this course. Students are referred to the end of
the chapter for the governing legislation for their jurisdictions, the terminology used in that
jurisdiction, the name of the document used to appoint the substitute decision-maker, and the
potential scope of the authority for each role (see Figure 2.5 Substitute Decision-makers by
Jurisdiction). Students are responsible for knowing the terminology of their jurisdiction, as well
as the terminology used in this course.
2.5.1.1 Supported and Assisted Decision-making

A number of provinces have legislation that recognizes roles where one person (A) is
appointed to assist another person (B) to make decisions. In these situations, A does not
have legal authority to make decisions on behalf of B. Rather, A must support and assist
B to make his or her own decisions and to implement those decisions. Some “supporters”
are appointed in a document. Others are appointed by the court. A discussion of
supported decision-making roles in Canada is beyond the scope of this course.47
2.5.2 Financial and Legal Decision-makers

When an adult wishes to appoint someone who will have the authority to make the adult’s
financial and legal decisions when the adult is not able to make those decisions, the adult may
make a document that is often called an “enduring (or continuing) power of attorney”. In Quebec
47
For information on the law in Canada in this area, and supported decision-making generally, see the Ontario Law
Commission background research report Understanding the Lived Experiences of Supported Decision-Making in
Canda: A Study Paper available at http://lco-cdo.org/en/capacity-guardianship-commissioned-paper-ccel
2-43
it is called a protection mandate. Powers of attorney were noted as one example of an agency
(see 2.4.1.1 Types of Agency Relationships).
As noted in the comparison of trustees and agents/trustees and mandates (see Figure 2.2:
Common Law Only: Trust and Agency Compared and Figure 2.3 Quebec Only: Trust and
Mandate Compared), an agent’s authority ends when the principal or agent becomes incapable.
Each jurisdiction has legislation that sets out the rules for making a power of attorney. The
legislation also permits a person to make a power of attorney that will not terminate if the adult
becomes incapable. The requirements for making power of attorney documents that continue
when the principal is incapable vary significantly. Most allow for the document to say when the
attorney can start to act. Some jurisdictions also have rules that govern the conduct and reporting
obligations of the attorney. Quebec is the only jurisdiction that requires the court to confirm a
person’s incapacity before the attorney/mandatary can continue to act.48 This process is called
homologation.
There may be reasons for a person to make more than one power of attorney and/or enduring
power of attorney. When this occurs, advisors and clients must be careful to ensure that the latter
one does not revoke the former one, and that the documents do not conflict with each other.
The court can also be asked to declare that a person is incapable of managing his or her financial
affairs and order that a person or persons, including a corporate trustee, is appointed to be
guardian to manage the adult’s financial and legal affairs. As guardian the person appointed has
authority to manage the adult’s financial affairs, subject to limits within the order or the
applicable law. There are a number of names for court appointed guardians.
The terminology for these two different legal arrangements is reviewed below. See Chapter 11
Substitute Decision-makers for Financial Affairs for a more detailed review of these roles.
2.5.2.1 Power of Attorney

 Donor: The individual (principal) who makes a power of attorney document
is often called the “donor”. “Grantor” is another term that is often used.
Quebec: A donor is called a mandator.
 Attorney: The person (agent) appointed to act on a donor’s behalf is called an
“attorney”. The term in this context should not be confused with the use of the
word “attorney” when referring to a lawyer, a term used in the United States.
Quebec: An attorney is called a mandatary, but is often referred to as an
“attorney”.
 Power of Attorney: A power of attorney is a written document that
authorizes an attorney to manage the financial affairs of the donor. A power of
attorney permits the attorney to do anything the donor can do, subject only to
the restrictions imposed by the document, legislation, or the law. At common
48
This general rule is subject to art. 2167.1 noted above.
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law a power of attorney is not valid during any subsequent incapacity of the
donor unless specifically stated. (see also Enduring Power of Attorney,
below).
Quebec: A “mandate” is a contract where the mandator empowers the
mandatary to represent him or her. The document that evidences the mandate
may be called a mandate or a power of attorney.49
 Enduring Power of Attorney: An enduring power of attorney is a power of
attorney that states the power of attorney is valid during any period of
subsequent mental incapacity of the donor. It may cover all of the donor’s
assets or be limited in some way.
Ontario: Ontario legislation calls an enduring power of attorney a
continuing power of attorney.50 The legislation also provides for a “power of
attorney for personal care” for making personal and health care decisions
when the donor is not capable.51 Therefore, when referring to a power of
attorney in Ontario it is important to distinguish the decision-making
authority of the document. See 2.5.3 Personal and Health Care Decision-
makers for more information on powers of attorney for personal and health
care decisions.
Quebec: The equivalent of an enduring power of attorney is a protection
mandate and only takes effect if the mandatary becomes incapable and on
homologation by the court (arts. 2166-2174 CCQ).
 Springing Power of Attorney: An enduring power of attorney comes into
effect in the future when a specified event occurs.
Common Law Only: Typically, the specified event occurs when the donor
becomes mentally incapable of making financial decisions. The power of
attorney sets out the nature of the event and how it should be proved. For
example, the enduring power of attorney says that it is to come into effect
when the donor becomes mentally incapable and that this must be confirmed
by two medical practitioners. A springing power of attorney might also be
used for situations where the donor is out of the country on military service.
Some jurisdictions have legislation that specifically addresses the
requirements for making a springing power of attorney.
Quebec Only: In Quebec, a protection mandate must be made in accordance
with certain formalities and the mandatary must request homologation by the
court before he or she can act. The homologation process requires evidence
that the mandator is incapable.
49
CCQ, art. 2130.
50
Substitute Decisions Act, 1992, S.O. 1992, c. 30, s. 7.
51
Substitute Decisions Act, ibid, ss. 46 and 49.
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Note that if a mandate already exists and it provides for when the mandator
becomes incapable, unless the court orders otherwise, the mandate continues
in force during the homologation proceedings for the protection mandate
(art. 2167.1 CCQ).
 General Power of Attorney: A general power of attorney is a power of
attorney that covers all of the donor’s assets.
 Limited or Specific Power of Attorney: This power of attorney limits the
duration or assets that the attorney is responsible for or is made for a specific
purpose. Examples include:
o a power of attorney made on a bank or credit union’s own power of
attorney form that limits the attorney’s authority to one or more accounts
at that institution.
o a power of attorney that authorizes the attorney to manage the donor’s
financial affairs while the donor is travelling or will be in the hospital;
o a power of attorney that authorizes the attorney to deal with specific
property such as interests in a business.
Common Law Only: A limited power of attorney may be an enduring power
of attorney.
Quebec Only: A limited power of attorney can only continue during
incapacity if it complies with requirements as to form of a protection mandate
(arts. 2166 and 2167 CCQ).
2.5.2.2 Guardian (Committee, Trustee, Tutors, and Curators)

A guardian is a person appointed by the court to make decisions on behalf of an incapable
adult. The authority of a guardian may be limited to some or all financial and legal
matters. The authority may include, or be limited to, personal and/or health care
decisions. For purposes of this course, the terms “property guardian” and “personal
guardian” are used where applicable to avoid confusion. Another common name for a
guardian is “committee”.
Property Guardian: If an adult is unable to manage his or her financial affairs,
provincial law provides a mechanism for the court to first declare the adult person
incapable of managing his or her affairs and then appoint a person(s) or a corporate
trustee to be the guardian to make financial decisions on the adult’s behalf. In some
jurisdictions, the property guardian has all the authority that the adult had when capable
subject to certain prohibitions, such as making a will. However, in other jurisdictions, the
types of decisions covered by the property guardian’s decision-making authority must be
indicated in the court order.
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Other names for a property guardian include “guardian for property” and “committee of
estate”. (See Figure 2.5: Substitute Decision-makers of Jurisdiction Substitute Decision-
makers by Jurisdiction.)
Alberta: The property guardian is called a “trustee”.
Quebec: There are different names depending on the type of authority and degree of
incapacity of the adult. They are “curator”, “tutor to a person of full age”, and
“adviser”. The court order is called a “protective supervision order”.
2.5.2.3 Estate (Property)

“Estate” refers to the property owned by the donor or incapable adult52
Quebec Only: The property is referred to as the patrimony.
2.5.3 Personal and Health Care Decision-makers

Information on personal and health care decision-makers is included in this chapter to familiarize
students with the terminology and different ways that a person can plan ahead for making
personal or health care decisions. However, this course does not deal with the details of this area
of decision-making.
Corporate trustees are not permitted to accept appointments to make personal care and health
care decisions. These decision-makers are usually family and friends.
2.5.3.1 Pre-Planning for Personal and Health Care Decisions –

Terminology
A person may plan ahead for who will make personal care and health care decisions
when the person is not capable of making those decisions him- or herself. The
terminology varies significantly across the country. See Figure 2.5 Substitute Decision-
makers by Jurisdiction at the end of the chapter for your jurisdiction. The rules for
making and using documents involved also vary between jurisdictions. Therefore, for
purposes of this course and any references to personal and health care decision-makers,
the following terminology is used.
 Maker: The person who makes a personal directive is the “maker.”
Other terms include “director,” “donor”, and “grantor”.
In Quebec, the term is “mandator”. Maker includes a person who makes a
directive.
52
“Estate” is also used to refer to the property transferred on the death of an individual or the property owned by an
individual during his or her lifetime. At common law, “estate” generally referred to real property, but in the
context of modern usage, it can refer to the entire wealth of an individual.
2-47
 Directive: A directive is a statement that sets out the health care decisions that
a maker wants made when he or she is no longer capable of consenting to or
refusing treatment. A directive may include personal care decisions.
Quebec Only: A “protection mandate” may include a directive but it is not a
binding direction.
 Proxy: A proxy is a person appointed by a maker and is given authority to
make personal care or health care decisions on behalf of the maker when the
maker becomes incapable. Alternate names are “agent,” “delegate,”
“substitute decision-maker,” “representative”, and “attorney for personal
care”. In this course the term “proxy” is used to avoid confusion with the
word “attorney” under a power of attorney in respect of financial matters or
property.
Quebec Only: A “mandatary to the person”.
 Personal Directive: A personal directive is the document made by a
person (a “maker”) that appoints a proxy and/or includes a directive.
Generally, a proxy must follow any directives that are in the document. In some
jurisdictions only a proxy can make decisions, although the proxy may be
required to follow a directive or other known wishes. In other jurisdictions a
directive can be a stand-alone document and/or the proxy, if there is one, is
not involved in the decision. In some jurisdictions only health care decisions
can be covered in a directive – other personal care decisions are excluded.
Quebec Only: A protection mandate can include a directive, or a directive
may be a stand-alone document. However these directives are not binding.
In this course the term “personal directive” will be used generically to describe a document
that includes a “directive” component, if any, and/or the appointment of a proxy.
2.5.3.2 Personal-care and Health-care Decisions Defined

These terms are used differently in each jurisdiction. Personal care is often used as a
generic term to distinguish personal decisions (relating to the physical person) from
financial decisions. In this context, personal care decisions may include both health care,
(e.g. consent to including medical treatment and withholding medical treatment), as well
as personal care. Personal-care decisions that are not health-care related generally include
decisions about where one lives, including placement in a health-care facility or long-
term care facility, as well as matters related to nutrition, clothing, personal hygiene,
social activities, and social contacts.
Legislation in some jurisdictions restricts the authority under a personal directive to
health care and medically related matters only. For example, in Ontario “personal care”
includes all types of non-financial decisions relating to the person, including health-
care decisions as well as a number of non-medical decisions. In New Brunswick,
“personal care” decisions are authorized with no definition whatever, but presumably the
2-48
broader meaning is intended. British Columbia defines health care and personal care, and
advance directives are limited to health care.
For jurisdictional terminology and the general scope of responsibility for each, see Figure
2.5 Substitute Decision-makers by Jurisdiction. Further restrictions may also be placed on
the types of health-care decisions that can be made, and/or specify how they must be
made.
2.5.3.3 Living Wills

Living wills are often thought of as documents made to provide instructions that are
restricted to end-of-life decisions. They provide directions as to the type of care and life-
sustaining medical treatment that should be administered or withdrawn in the case of a
terminal illness where such treatment would only prolong death and not provide any
benefit for the patient.
In the United States legislation provides for making living wills and many forms can be
located on the Internet. However, Canadian legislation sets out rules for making personal
directives as noted above. A maker who wishes to set out specific wishes such as those
that might be in a living will must therefore ensure that the instructions are incorporated
in a directive that satisfies the applicable provincial or territorial laws. In provinces where
the proxy is required to make decisions in accordance with the maker’s pre-expressed
wishes, these wishes may be written down outside of a personal directive document. In
this case, completion of a document or form called a “living will” that does not meet the
requirements for a directive would be evidence of pre-expressed wishes.
2.5.3.4 Ulysses Agreements

This is an advance instruction, typically given by a person with a known mental illness,
to prevent the maker from the consequences of expressing inappropriate and unwanted
instructions made at a later date when under the influence of the mental illness. The
origin is from Greek mythology. The songs of the Sirens were beautiful and captivating
but drove the listener to certain death. Sailors normally stopped their ears when
passing to avoid being dashed on the rocks or plunging to their deaths. Ulysses wished
to hear the music without the consequences and so had himself bound and ordered his
crew not to release him or obey his instructions.
2.5.3.5 Personal Guardians

Personal guardians are appointed by the court to make personal-care and health-care
decisions. As with a property guardian, the court must determine that the adult person is
incapable of making these decisions for him- or herself and then appoint a personal
guardian. Corporate trustees are not authorized to accept these kinds of appointments.
However, the public official for the jurisdiction, usually a Public Guardian and Trustee
(Public Curator in Quebec), may be appointed.
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The authority of the personal guardian may be a general authority over all decisions,
including health care, nutrition, shelter, clothing, hygiene, or safety. Or the authority may
be limited.
2.5.4 Requirements to Appoint a Substitute Decision-maker

As noted above, substitute decision-makers are appointed in documents in accordance with
provincial legislation or by court order.
2.5.4.1 Appointment by the Adult

When making an enduring power of attorney or personal directive, the maker must have
the requisite mental capacity. Generally, he or she must understand the nature and effect
of the document. Some legislation now includes a test of capability that must be met in
order to make the document.
The substitute must also be age of majority53 and capable. Again each jurisdiction may
have additional requirements and/or rules that prohibit certain people from acting who
may be in a conflict of interest. For example, in British Columbia, an attorney or
representative cannot be a person who is paid to provide personal or health-care services
to the adult, or an employee of a facility providing those services and where the adult
resides. There is an exception for a spouse, parent, or child.
Finally, each jurisdiction has rules on the formal requirements of the document, including
who may act as witness. For example two witnesses may be required who are not the
substitute or the substitute’s spouse or child, or a lawyer may be required. Some
provinces only require one adult witness. If the attorney may be need to deal with land,
there may be additional requirements.
Quebec Only: The protection mandate is made by a notarial act en minute or in the
presence of two witnesses (arts. 2166 and 2167 CCQ).
2.5.4.2 Appointment by the Court

If the court is asked to appoint a guardian, the court application will require evidence of
the adult’s mental incapability, and information about the adult’s assets, liabilities and
family members. The court must confirm the finding of incapability and appoint the
guardian(s).
In most jurisdictions, there is a public body that reviews all court applications and
monitors the guardian after the appointment. This agency is usually known as the “Public
Trustee” or the “Public Guardian and Trustee”, depending on the province. In Quebec,
the public official is the Public Curator.
53
See Figure 2.4 Age of Majority by Jurisdiction.
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2.5.5 Responsibilities of a Substitute Decision-maker

Generally, a substitute decision-maker responsible for financial and legal affairs is a fiduciary
and the role has many similarities to both a personal representative and a trustee. When the
substitute begins to act, assets must be located and safeguarded, however title to the assets does
not change.
Common Law Only: The incapable person remains the legal and beneficial owner. Debts and
ongoing liabilities must be attended to and ongoing tax returns must be completed.
Quebec Only: The incapable person remains the owner of his or her patrimony (all property
and obligations or debts). Tutors, curators, or mandataries appointed to act when a person of
full age is incapable are governed by the general rules on administration of the property of
others and specific rules regarding protection mandates or tutorship, as the case may be.
Third parties need to know that the substitute is now acting. If the substitute is an attorney acting
under an enduring power of attorney and the donor can still make all or some decisions,
appropriate arrangements should be made with third parties to avoid situations where the donor’s
authority is not recognized.
Once everything is under the substitute’s control, the substitute will need to determine the adult’s
needs and wishes, prepare a budget to ensure expenses can be covered, and manage investments.
The substitute will also need to keep accounts that show how all the assets have been managed,
including sales and purchases, and document all income earned and expenses. Generally, the
substitute’s primary duty is to the adult. However, if there are dependents, consideration to
meeting their needs may be required.
Some legislation now also specifically requires the substitute to consult with the adult where
possible to determine his or her current wishes and to involve the adult in the decisions that
affect him or her.54
2.6 LEGAL CAPACITY

2.6.1 Capacity to Enter a Transaction
A person must have legal capacity to enter a transaction if the transaction is to have legal effect.
In order to have legal capacity two tests must be met – the person must be of a certain age and he
or she must have the requisite mental capacity. The law sets out different ages and different tests
of capacity for different transactions and legal documents. Some of the law is in legislation55 and
some is found in the common law.
54
For example, see British Columbia’s Power of Attorney Act, R.S.B.C. 1996, c, 370, s. 19(2) and Patient’s
Property Act, R.S.B.C. 1996, c. 349, s. 18(2) (effective December 1, 2014); Ontario’s Substitute Decisions Act,
1992, supra note 50, s. 30(2).
55
See, for example, arts. 1 to 4, 153 and 154 CCQ.
2-51
2.6.1.1 Legal Capacity and Age of Majority

Generally a person must be the age of majority to enter contracts or execute documents,
such as a will or enduring power of attorney, or to deal with property, such as real estate
that is in that person’s name. However, there are statutory exceptions for certain
transactions and documents such as the minimum age for making a will. There are also
rules on the minimum age at which one can carry out certain activities, such as voting,
driving a car, or purchasing alcohol. Some laws are federal, while others are provincial or
territorial. For purposes of this course we are generally concerned with the age at which
someone can make a will or enduring power of attorney, or receive property from an
estate or trust and give a valid discharge. The chart (see Figure 2.4 Age of Majority by
Jurisdiction) sets out the age of majority in each jurisdiction. For exceptions dealing with
the age at which a person can make a will or an enduring power of attorney, see Chapter
3 The Law of Wills, and Chapter 11 Substitute Decision-makers for Financial Affairs.
Figure 2.4: Age of Majority by Jurisdiction

Jurisdiction Age of
majority*
British Columbia, New Brunswick, Newfoundland and 19
Labrador, Nova Scotia, Yukon, Northwest Territories,
Nunavut
Alberta, Saskatchewan, Manitoba, Ontario, Prince 18
Edward Island, Quebec
* The age of majority is set in each jurisdiction’s Age of Majority Act
2.6.1.2 Legal Capacity to Enter Transactions

As noted above, a person must have the requisite mental capacity to enter a transaction or
prepare documents. The tests vary depending on the purpose of the transaction or
document, but generally they seek to establish that the person understands the nature of
the transaction being entered and the consequences of the transaction or making the
document. Some of these tests have been established by the common law (e.g. the
capacity to make a will, often called “testamentary capacity”, the capacity to make a gift
or settle an inter vivos trust, the capacity to enter a contract and the capacity to make a
power of attorney). However, in more recent years, some jurisdictions have incorporated
a statutory test into the relevant legislation such as the legislation that governs the rules
for making an enduring power of attorney or a personal directive.
For a review of the law of testamentary capacity, see Chapter 3 The Law of Wills and for
tests for capacity to make an enduring power of attorney, see Chapter 11 Substitute
Decision-makers for Financial Affairs.
2.6.1.3 Capacity to Make Decisions and Manage One’s Affairs

A person’s mental capacity also becomes an issue when it is necessary to determine if a
substitute decision-maker should start to act under an enduring power of attorney or
2-52
personal directive (or in Quebec if it is time to homologate a protection mandate) or if the

court needs to appoint a property or personal guardian.
The law in this area continues to evolve as society continues to seek to better understand
and define what it means to be “incapable” of making a decision for oneself. Although
there is no uniformity in the legislation in Canada, students in some jurisdictions will
observe an increased focus on a person’s ability to make decisions that need to be made
in that person’s life. Sometimes this is referred to as “functional ability”. A medical
diagnoses may explain the reasons for an adult’s difficulty in managing, and the
prognosis will indicate whether the adult’s ability may improve, worsen, or stay the same.
However capacity assessors today often focus on the decisions that need to be made in a
person’s life and the assistance required to make those decisions before coming to the
conclusion that a person is incapable of managing his or her financial affairs, and/or him-
or herself.
These issues become increasingly important when a decision is required as to whether or
not the person should be declared mentally incapable of making all financial and/or
personal decisions so that a guardian can be appointed to make those decisions and to
protect the person from financial loss or other harm. For example, if a person is living on
federal pensions, has limited assets, and is living at home with supportive family
members, the decision-making needs and the need for someone to have legal authority to
deal with financial matters will be very different from the needs of someone who has
significant assets and/or business decisions that need to be made.
Over the past two decades, a number of jurisdictions in Canada and elsewhere have
introduced laws that seek to ensure that adults with diminished capacity can continue to
participate in the decisions that affect their lives for as long as possible. This has led to
the introduction of supported decision-making models (see 2.5.1.1 Supported and
Assisted Decision-making.) and legislation that sets out a duty on the substitute decision-
maker to involve the incapable adult in decisions that need to be made. On the other
hand, society has a responsibility to protect vulnerable people. See Chapter 11 Substitute
Decision-makers for Financial Affairs for an in-depth review of the roles and
responsibilities of substitute decision-makers and illustrations of how jurisdictions have
sought to balance these two objectives.
2.6.1.4 Terminology: Capacity, Capability, Incapacity, and Incapability

As laws move towards recognizing that it is important to support an adult and focus on
the adult’s capabilities, the language of capability and incapability is being adopted more
and more often. However, the terminology of capacity and incapacity is in some
legislation and is used in the common law rules.
Quebec Only: The CCQ refers to “incapacity” and “capacity” when setting out the
rules for curators (art. 281 CCQ) and tutors (art. 285 CCQ). It uses “capable” when
setting out the rule for advisers (art. 291 CCQ).
2-53
This course will follow the language of legislation or legal rules where applicable. The
terms will otherwise be used interchangeably.
2.7 CHOOSING A FIDUCIARY AND ACCEPTING A FIDUCIARY

APPOINTMENT
2.7.1 Introduction
This Chapter has reviewed three types of fiduciary appointments that will be studied in this
course and future courses – trustees, personal representatives, and substitute decision-makers for
financial affairs. When the governing document is prepared, decisions are required about who to
appoint, whether more than one should be appointed, and whether or not to appoint alternates.
The court must consider a number of the same factors when appointing a personal representative,
guardian, or trustee.
The individual(s) or corporate trustee chosen for the role must also agree to accept the
responsibility. Many factors go into making these decisions. This section reviews practical
considerations when deciding who should be chosen to be a fiduciary or whether to accept an
appointment. Upon completion of the course, students will be able to revisit this chapter and
apply these considerations to a variety of scenarios in order to identify important factors that
might influence the choice of a fiduciary or whether to accept an appointment. Similar
considerations will apply to the appointment of an administrator, where there is no executor, or a
property guardian.
2.7.2 Choosing a Fiduciary

As this chapter has illustrated, a fiduciary has a number of responsibilities. When someone is
creating a trust, preparing a will, or appointing a substitute decision-maker in advance of
becoming incapable, there are a number of considerations or questions that might be asked that
will help identify the appropriate person(s) to be appointed and issues to be addressed when the
document is drafted. Some of the more common questions and issues are identified below. The
responses to these questions, and the decisions that will be made, will depend on the purpose and
anticipated duration of the appointment, the nature of the assets, and issues that are anticipated to
arise during the administration. The nature of the relationships between and among beneficiaries
and possible fiduciaries will often be a critical factor.
2.7.2.1 Skill, Ability, and Time

Does the fiduciary have the necessary skills, abilities, and time necessary to be able to
carry out the role, make the decisions that must be made, and deal with the beneficiaries?
Consideration might be given to the following points.
 Are there any special assets that require special skills or knowledge, such as a
business or a rental property?
 If there are investments to be managed, can the fiduciary manage them or will
a specialist need to be hired?
2-54
 What unique issues need to be addressed with the beneficiaries? For example,
is there a beneficiary with a disability that requires special attention? Are there
tensions or estrangements that could cause conflict?
2.7.2.2 Availability and Alternates

Will the fiduciary be available and able to accept the appointment when the time comes?
If not, is there someone who can or should be named as an alternate?
 Consider the age of individuals, when the fiduciary will likely need to act, and
for how long. Estate administrations generally require a lot of attention for a
number of months, but then the work lessens and most estates are
administered in one to two years, unless there are special circumstances.
Trusts can continue for years.
 If the fiduciary is older than the maker, will that fiduciary be around or able to
act?
 If two have been appointed to act together, is it appropriate for one to continue
alone, or must he or she be replaced?
2.7.2.3 The Settlor as Trustee

If the trust is an inter vivos trust, is it appropriate for the settlor to be trustee? Will there
be tax issues?
Quebec Only: If the settlor is trustee he or she must act jointly with an independent
trustee who is not a beneficiary (art. 1275 CCQ).
2.7.2.4 Location
Is the place where the fiduciary lives appropriate for the responsibilities?
 Should the fiduciary be in the same city or can the fiduciary be elsewhere and
look after matters from a distance?
 Will the fiduciary’s location affect the tax regime that applies to the trust or
estate?
 If investments must be managed, will the investment advisor be licenced to
give investment advice to a fiduciary in another jurisdiction? Special attention
should be paid to situations where the parties are located in different
countries.
2.7.2.5 How Many?

Is it appropriate or desirable to appoint more than one fiduciary?
 If a trust company is appointed, is it desirable to have someone close to the
family or a family member assist with gathering information or monitoring a
beneficiary’s needs?
2-55
 Will that second person give the maker comfort to know that someone who
knows the family will be part of the decision-making?
 As noted above, if one can no longer act, should the document provide for one
to continue, identify an alternate, or provide a mechanism to appoint a
replacement?
2.7.2.6 How Will Multiple/Co-fiduciaries Work Together?

When the appointment contemplates two or more fiduciaries acting together, a number of
questions need to be addressed:
 If there is more than one fiduciary, how will disputes be resolved?
o Must decisions be made unanimously?
o Is it appropriate to provide a majority rule clause?
o If there is a majority rule clause, is one of the named fiduciaries required to be
in the majority?
If there is more than one fiduciary will it be a workable arrangement?
 Will they get along?
 Practically, will they be able to meet often enough to make the decisions that need
to be made?
2.7.2.7 Compensation
Professionals and corporate trustees who agree to accept appointments will expect to be
compensated. Individuals are also entitled to compensation in most situations. These
matters should be discussed prior to appointment and any agreements that are required
will need to be documented and incorporated appropriately to ensure they are binding.
2.7.2.8 Willingness to Accept

Although it is possible to appoint someone without asking, a fiduciary is not obliged to
accept the appointment. Therefore, it is important to consider discussing the appointment
with the fiduciary in advance to ensure that he or she is willing to accept the appointment
and/or to identify any concerns or issues that should be addressed when making the
document. This also allows the fiduciary to learn more about why he or she has been
selected.
Quebec Only: If a person is the sole heir of the succession, he or she is obliged to accept
the appointment (art. 784 CCQ).
2.7.3 Corporate Trustees

While a corporate trustee may seem an impersonal choice, they offer a number of advantages to
be considered when choosing a fiduciary. These include:
 staff dedicated to the administration activities;
2-56
 experience and expertise dealing with a wide range of assets, complex issues, and
beneficiaries with a range of needs and personal circumstances;
 systems for creating and maintaining accounts;
 impartiality;
 longevity;
 continuity;
 presence in multiple locations and provinces; and
 access to specialized knowledge and support to assist with the administration.
2.7.4 Accepting a Fiduciary Appointment

Many of the considerations and questions that a potential fiduciary will have are the same as
those that must be addressed by the maker of a trust, will, or enduring power of attorney.
Although it is not possible to anticipate everything that may happen during an administration, it
is possible to make inquiries and consider what is known and what might be unknown. Before
accepting an appointment, a fiduciary will want to also consider the matters below.
2.7.4.1 Reason for Being Appointed

It is important to understand the reason for being appointed as it may offer clues as to the
issues that may arise with co-fiduciaries or beneficiaries, and the nature of the primary
responsibilities that are expected. This is particularly true if the appointment is in favour
of a corporate trustee, professional advisor, or business partner due to a special skill or
knowledge they may have and/or their ability to remain impartial. Alternatively the
reason may relate to a personal, family, or business relationship with the maker and the
expectation may be for the trustee to use his or her familiarity with the family or business
to assist a corporate trustee by providing information and context to a given situation or
decision to be made.
2.7.4.2 Assets to be Managed

There are many possible considerations related to the assets that may be held in a trust,
managed by a substitute decision-maker, or must be dealt with in an estate
administration. Examples of the questions that might be asked include:
 What are the assets that will need to be managed and what expectations are
there? For example, is a business to be sold or maintained?
 Who else is involved in the management of the asset or business?
 Are there expectations to use certain external advisors or investment advisors?
 Does the document or relevant law permit hiring agents or delegating to
investment experts?
2.7.4.3 Unique Characteristics of the Beneficiaries

It will be important to understand who the beneficiaries of the estate or trust are, their
special needs, and the issues that may arise between beneficiaries, or between the
2-57
fiduciary and the beneficiary(ies). Importantly, will the beneficiaries and/or family
members accept and trust the fiduciary, or is there a risk of conflict and tension?
2.7.4.4 Time Involved and Duration of the Appointment

Prior to acceptance, the fiduciary will want to consider how much time will be required to
carry out the responsibilities and how long the appointment may last. If there is a risk of a
long administration, is there a workable mechanism for resignation and replacement or
will a court application be required?
2.7.4.5 Co-fiduciaries
If there is more than one fiduciary, each will want to consider whether they are willing
and able to work with the other or if differences could make the job difficult or
impossible to carry out. Decision-making processes and dispute-resolution processes
could be important considerations in whether to accept the appointment.
2.7.4.6 Compensation
Corporate trustees will wish to seek agreement to a compensation schedule where
possible to avoid issues in the future. Other professionals may also require compensation
if they agree to act. Individuals may want to seek compensation. Whether or not
compensation is dealt with in an agreement or under the applicable legislation and law,
the fiduciary will want to consider whether the proposed approach is adequate given the
time and responsibility anticipated, as well as the frequency that payment can be taken.
Where there are co-fiduciaries, it will be desirable to understand in advance how
compensation will be shared. For a review of the law that applies to fiduciary
compensation, see Chapter 9 Compensation and Expenses.
See “Review Questions” for this chapter in the Student Resources online.
2-58
Figure 2.5: Substitute Decision-makers of Jurisdiction

The legislation governing this field is usually found in a number of statutes. Some statutes provide detailed
definitions for the terminology used. Some clearly distinguish decision-making for financial and legal matters, and
decision-making for personal care and/or health care. Some do not. The table below is offered to assist students to
locate the primary legislation that applies. It cannot capture all details and nuances. Students are encouraged to
review the legislation and speak to mentors to learn the unique details for their jurisdiction. Note generally, that
authorities to make health-care decisions are only effective when the adult is not capable of consenting to the health-
care treatment. See legislation for details. This table only captures directives where the legislation also deals with the
proxy, or the proxy’s role in ensuring the directive is followed.
Substitute’s Legislation2 Substitute’s Maker’s Name of Document Appointing

Role1 Name Name Substitute Decision-maker
(Adult)3
British Columbia
Attorney Power of Attorney Act, Attorney Adult Enduring power of attorney4
R.S.B.C. 1996, c. 370
(Part 2)
Attorney Representation Representative Adult Representation agreement for routine
Agreement Act, management of financial affairs (s. 7
R.S.B.C. 1996, c. 405 RA). Note: A s.7 RA may authorize the
representative to:
 help the adult make decisions, and/or
 make decisions on behalf of the adult.
See regulation for detailed list.
Proxy Representation Representative Adult Representation agreement. (RA)
Agreement Act, (Personal and health care)
R.S.B.C. 1996, c. 405 s. 9 RA–Broad authority
s. 7 RA–Limited authority
Directive Health Care n/a Adult Advance directive. (Health care only)
(Consent) and Care See s. 19.3 for rules when there is an
Facility (Admission) advance directive and a representation
Act R.S.B.C. 1996, c. agreement.
181
Guardian Patient’s Property Act, Committee of Patient Court order
R.S.B.C. 1996, c. 349. Estate and/or
Person
2-59
Alberta
Attorney Powers of Attorney Attorney Donor Enduring power of attorney 4

Act, R.S.A. 2000,
c. P-20
Proxy Personal Directives Agent Maker Personal directive.
Act, R.S.A. 2000, c. P- Includes a directive and/or a proxy.
6 (Personal and health care)
Property Adult Guardianship Trustee Represented Trusteeship order (court)
Guardian and Trusteeship Act, adult
S.A. 2008, c. A-4.2
Personal Adult Guardianship Supporter Supported Supported decision-making authorization
Guardian and Trusteeship Act, adult signed by adult
S.A. 2008, c. A-4.2 (Personal and health care)
Co-decision-maker Assisted Co-decision-making order (court)
adult (Personal and health care)
Guardian Represented Guardianship order (court)
adult (Personal and health care)
Saskatchewan
Attorney Powers of Attorney Property Attorney Grantor Enduring power of attorney (property) 4
Act, S.S. 2002,
c. P-20.3
Proxy Powers of Attorney Personal Attorney Grantor Enduring power of attorney (personal)
Act, S.S. 2002, (Personal affairs only)
c. P-20.3
Proxy Health Care Directives Proxy Grantor Directive. (Health care only).
and Substitute Health Includes a directive and/or a proxy.
Care Decision Makers
Act, S.S. 2015,
c. H-0.002
Guardian Adult Guardianship Property/Personal Adult Court order
and Co-decision- co-decision-
making Act, S.S. 2000, maker;
c. A-5.3 Property/Personal
guardian;
Temporary
property/personal
guardian
Manitoba
Attorney Powers of Attorney Attorney Donor Enduring power of attorney for property4
Act, C.C.S.M., c. P97
Proxy Health Care Directives Proxy Maker Health care directive. (Health care only).
Act, C.C.S.M., c. H27 Includes a directive and/or a proxy
Guardian Vulnerable Persons Substitute Vulnerable Court order. See definition of vulnerable
Living with a decision-maker for person person and mental disability (manifested
Disability Act, personal care prior to age of 18).
C.C.S.M., c. V90 and/or for property See s. 4 for conflict between Health Care
Directives Act and this Act.
Guardian Mental Health Act, Committee of Incapable Court order.
C.C.S.M., c. M110 property; person (Includes personal and health care,
Committee of subject to Health Care Directives Act).
property and See also Vulnerable Persons Living with
personal care a Disability Act.
2-60
Ontario
Attorney Substitute Decisions Attorney Grantor Continuing power of attorney for
Act, 1992, S.O. 1992, property4
c. 30
Proxy Substitute Decisions Attorney Grantor Power of attorney for personal care
Act, 1992, S.O. 1992,
c. 30
Guardian Substitute Decisions Guardian of Incapable Court order
Act, 1992, S.O. 1992, Property and/or person (Personal and health care)
c. 30 Person
Statutory guardian Incapable Public Guardian and Trustee (PGT)
of property person appoints applicant to replace PGT as
statutory property guardian.
Quebec
Attorney Civil Code of Québec, Mandatary Mandator Protection mandate4
R.S.Q. 1991, c. 64 (Attorney)
Proxy Civil Code of Québec, Mandatary Mandator Protection mandate4
R.S.Q. 1991, c. 64 (Attorney)
Guardian Civil Code of Québec, Curator Protected Court order: Full administration over
R.S.Q. 1991, c. 64 (arts. 281-284 person; property except for investments (simple
CCQ) Person of administration) and/or person (Personal
full age care and health care)
Tutor to the person (under Court order: Simple administration over
and/or property protective property and/or person (Personal care
(arts. 285-290 supervision) and health care)
CCQ)
Adviser Court order: Appoint adviser to assist
(arts. 291-294 with administration of property
CCQ)
New Brunswick
Attorney Property Act, R.S.N.B. Attorney for Donor Power of attorney (not terminated by
1973, c. P-19 property mental incompetence)
Proxy Infirm Persons Act, Attorney for Principal Power of attorney for personal care
R.S.N.B. 1973, c. I-8 personal care
Guardian Infirm Persons Act, Committee of Mentally Court order
R.S.N.B. 1973, c. I-8 estate and/or incapable
person person
Newfoundland and Labrador
Attorney Enduring Powers of Attorney Donor Enduring power of attorney for property
Attorney Act, R.S.N.L.
1990, c. E-11
Proxy Advance Health Care Substitute decision- Maker Advance health care directive. May include
Directives Act, S.N.L. maker instructions, general principals and/or
1995, c. A-4.1 appoint a substitute decision-maker.
(Appears to be limited to health care.)
Guardian Mentally Disabled Guardian Mentally Court order
Persons’ Estates Act, disabled
R.S.N.L. 1990, c. M-70 person
2-61
Nova Scotia
Attorney Powers of Attorney Attorney Donor Enduring power of attorney
Act, R.S.N.S. 1989,
c. 352
Proxy Personal Directives Delegate Maker Person directive (Personal care and health
Act, S.N.S. 2008, c. 8 care). May include instructions, general
principals and/or appoint a delegate
Guardian Adult Capacity and Representative Adult Court order
Decision-Making Act,
S.N.S 2017, c. 4
Prince Edward Island
Attorney Powers of Attorney Attorney Donor Power of Attorney (during legal
Act, R.S.P.E.I. 1988, incapacity)
c. P-16
Proxy Consent to Treatment Proxy Maker Health care directive. May include
and Health Care instructions, general principals and/or
Directives Act, appoint a proxy.
R.S.P.E.I. 1988, (Appears to be limited to health care)
c. C-17.2
Property Public Trustee Act, Committee Incompetent Court order. See also personal guardian.
Guardian R.S.P.E.I. 1988, person
c. P-32.2
Personal Mental Health Act, Guardian Incapable Court order.
Guardian R.S.P.E.I. 1988, person (Personal care and health care)
c. M-6.1
Yukon5
Attorney Enduring Powers of Attorney Donor Enduring power of attorney
Attorney Act, R.S.Y.
2002, c. 73.
Adult Protection and Representative Adult Representation agreement.
Decision Making Act, See regulation for definition of financial
S.Y. 2003, c. 21. affairs.
Schedule A - Part 2 –
Representation
Agreements
Proxy Adult Protection and Representative Adult Representation agreement.
Decision Making Act, (Personal care and health care).
S.Y. 2003, c. 21. See regulation for limits.
Schedule A – Part 2 – See also Care Consent Act.
Representation
Agreements
Proxy Decision Making Proxy Maker Directive. Appoints proxy.
Support and (Personal care and health care)
Protection of Adults S. 29 provides for a directive to contain
Act, S.Y. 2003, c. 21 - information and wishes.
Schedule B Care
Consent Act
Guardian Adult Protection and Guardian Adult Court order. Roles may be limited to
Decision Making Act, specific areas of decision-making, or
S.Y. 2003, c. 21. assigned to different guardians.
Schedule A–Part 3–
Court Appointed
Guardians
2-62
Northwest Territories
Attorney Powers of Attorney Attorney for Donor Enduring power of attorney
Act, S.N.W.T. 2001, Property
c. 15
Proxy Personal Directives Agent Director Personal directive. Appoints agent.
Act, S.N.W.T. 2005, (Personal care and health care).
c. 16 S. 5 provides for a directive to contain
information and wishes.
Property Guardianship and Trustee Represented Court trusteeship order.
Guardian Trusteeship Act, person
S.N.W.T. 1994, c. 29
Personal Guardianship and Guardian; Represented Court guardianship order.
Guardian Trusteeship Act, Temporary person Identifies area of decision-making covered.
S.N.W.T. 1994, c. 29 guardian
Nunavut
Attorney Powers of Attorney Attorney Donor Enduring power of attorney
Act, S.Nu. 2005, c. 9
Proxy No legislation – – Health care directive
Property Guardianship and Trustee Represented Court trusteeship order.
Guardian Trusteeship Act. person
Personal S.N.W.T. 1994 c. 29 Guardian; Represented Court guardianship order.
Guardian as amended Temporary person
guardian
Footnotes:
1
This list includes attorney’s under an enduring power of attorney, proxies under a personal directive, directives where
applicable, and guardians (property and personal) where appointed by the court. See chapter for terminology to be used
in this course. This table does not include guardians appointed through “statutory guardianship” processes that provide
for the Public Trustee or Public Guardian and Trustee to become guardian through a non-court process. See Chapter
11, Substitute Decision-Makers for Financial Affairs for more information on these roles.
2
See related regulations for further details.
3
“Maker” refers to a person who makes a document. “Adult” refers to a person who has been declared incapable of
managing his or her affairs and someone has been appointed to make decisions on behalf of that adult. Where possible,
defined terms are indicated. Where terms are not defined, the terminology is taken from the language of the legislation.
4
Except for Quebec, an enduring power of attorney is effective when it is made unless there is a provision that states
the circumstances (when and how) the enduring power of attorney becomes effective (springing clause). The
legislation in these provinces include a provision that specifically permits the maker to set the condition for when the
enduring power of attorney comes into effect (springing) and/or sets out requirements. The relevant sections are: BC
(s. 26); AB (s. 5); SK (s. 9 Contingent appointment); MN (s. 6); ON (s. 7); QUE(art. 2166 requires the mandate to be
homologated and incapacity confirmed before the court before it is effective); NFLD (s. 2 if for legal incapacity); YK
(s. 6); NWT (s. 13); NU (s. 3).
5
See Adult Protection and Decision Making Act, S.Y. 2003, c. 21. Schedule A – Part 1 for supported decision-making
agreements and associate decision-makers.
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Chapter 2

Trustees, Personal Representatives, and

Learning Objectives ............................................................................................................... 2-4

Figure 2.1: Classification of Trust Diagram ........................................................................................... 2-24

Trustees, Personal Representatives, and

2.1.1 Quebec Only: Administration of the Property of Others

2.2.1.2 Three Essential Features of the Common Law Trust

2.2.1.3 A Trust Continues

2.2.1.4 A Trust Is Irrevocable

2.2.1.5 A Settlor May Be a Trustee or a Beneficiary and/or Reserve

2.2.1.6 Who Can Be A Settlor or a Trustee?

2.2.1.7 The Quebec (Civil Code) Trust9

2.2.1.8 Establishing a Trust Under the CCQ

2.2.2 Quebec Only: What Is a Trust?

2.2.2.1 The Patrimony

2.2.2.3 Four Essential Elements of a Quebec Trust

2.2.2.4 If a Settlor or Beneficiary Is the Trustee of a CCQ Trust

2.2.2.5 A CCQ Trust Continues and May Not be Revoked

2.2.2.6 Who Can Be a Settlor or a Trustee of a CCQ Trust?

2.2.2.7 The Common Law Trust21

2.2.3 Common Law Trusts and Quebec Trusts Compared

2.2.4 Types of Trusts

2.2.4.1 Common Law Only: Introduction

2.2.4.2 Quebec Only: Introduction

2.2.5 Classifications Used to Describe Trusts

2.2.5.1 How the Trust Was Created: Express Trusts

2.2.5.3 Common Law Only: Purpose of the Trust

2.2.5.4 Quebec Only: Purpose of the Trust

2.2.5.5 Interests in the Trust

 An income or revenue interest generally refers to a beneficiary’s entitlement

2.2.5.6 Personal Trusts: Further Classifications

2.2.5.7 Common Law Only: Trusts Arising by Operation of Law –

1. Automatic resulting trust: An automatic resulting trust is one where

2.2.5.8 Quebec Only: Trust Arising by Operation of Law

2.2.5.9 Trust Classification Diagram

Figure 2.1: Classification of Trust Diagram

Personal Purpose Resulting Constructive

Non- Automatic Presumed

Fixed Interest Discretionary Fixed Interest Discretionary

2.2.6 Common Law Only: Four Requirements to Establish a Trust

2.2.6.1 Capacity of the Relevant Parties

2.2.6.2 The Three Certainties

2.2.6.3 Constituting the Trust – Transferring the Assets

2.2.6.4 Compliance with the Formalities

2.2.7 Quebec Only: Requirements to Establish a Trust

 the settlor must transfer property from his or her patrimony,

2.2.8 Choosing a Trustee

2.2.9 Accepting the Appointment as Trustee

2.2.9.1 Common Law Only: Accepting the Appointment

2.2.9.2 Quebec Only: Accepting the Appointment

2.2.10 Trustee Duties

2.2.10.2 Overriding Duty of Care

2.2.10.3 Duty Not to Delegate

2.2.10.4 Duty of Loyalty (No Conflict of Interest)

2.2.10.5 Duty of Impartiality

2.2.10.6 Duty to Account (Provide Information)

2.2.11 Trustee Powers

2.2.12 Trustee Duties and Powers and the Administration of a Trust

2.3 PERSONAL REPRESENTATIVES (EXECUTORS AND

2.3.1.1 Terminology for Maker of a Will

2.3.1.2 When There Is No Will

2.3.2 Personal Representatives (“Liquidators” in Quebec)

2.3.2.1 When There Is a Will (Executor)

2.3.2.2 When There Is No Will or There Is No Executor