After a Death – Forthcoming Changes to the Trustee Act

Written by: James Castillo

When an individual dies (“Deceased Person”), a testamentary trust (“Testamentary Trust”) is created in accordance with their last will and testament (“Will”). The executor of the estate would transfer the Deceased Person’s assets (“Estate”) to the trustee (“Trustee”) appointed by the Deceased Person or by the Courts in accordance with the terms of the Will, and they are to hold and manage the Estate on behalf of the beneficiaries (“Beneficiaries”) under the will. It is important for Trustee to know their obligations and for Beneficiaries, to know their rights.

The new Trustee Act, SA 2022, cT-8.1 (“New Trustee Act“) (formerly Bill-12), when proclaimed in force, will contain changes to make the management of trusts, including Testamentary Trusts more efficient and more cost effective. Trustees both old and new, and Beneficiaries should be aware of some of the changes to ensure that they know what their rights and obligations are.

Trust Instrument Prevails. The Will of the Deceased Person prevails unless the New Trustee Act states otherwise. This means that the Will shall dictate the course of administration of the Testamentary Trust, including the process of distribution of assets and payment of liabilities.

Duty of the Trustee. A Trustee must exercise the care, diligence, and skill that a person of ordinary prudence would exercise in dealing with the Deceased Person’s property, while a professional Trustee must exercise a greater degree of said skill in the administration of the Estate. This means that a Trustee cannot act contrary to the terms of the will, the best interest of the beneficiaries, or the New Trustee Act.

Duty to Report to Beneficiaries. Trustees must deliver a statement of assets and liabilities, inclusive of its value and basis of its valuation, to Beneficiaries for each fiscal period of the Testamentary Trust. This means that a Trustee should ensure that they keep proper accounting of the assets, including records of assets entering and leaving the Testamentary Trust to ensure no discrepancy.

Removal of a Trustee. A Trustee may be removed by the Court on application by an individual or by other Trustees if the Trustee fails to demonstrate the proper care, diligence, and skill that they ought to have exercised in the administration of the Testamentary Trust which detrimentally affects it. This means that if the Trustee fails to give proper accounting to the Beneficiaries, they could be removed to avoid further damage.

Variations of a Testamentary Trust. A Trustee or a Beneficiary may vary the Testamentary

Trust with Court approval or if provided for in the Trust Instrument. This means that if either party believes that a variation would be beneficial for everyone, they could either make an application to the Court to vary the Testamentary Trust or to follow the instructions in the Trust Instrument.