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Key Considerations When Drafting a Trust in a Will

Creating a trust in a will is a powerful way to ensure your assets are distributed according to your wishes after your death. However, there are several important legal and practical considerations to account for when drafting such a trust. Here are some key factors to keep in mind, grounded in statutory requirements, common law principles, and case law precedents.






1. Statutory Requirements

  • Writing Requirement: According to the Statute of Frauds (R.S.N.S. 1989, c. 442, s. 6), any trust granted or assigned must be in writing and signed by the person granting the trust, or by their will. This ensures the trust is legally valid and enforceable.

  • Trustee Appointment: The Trustee Act (R.S.N.S. 1989, c. 479, s. 71) allows the appointment of a trustee through a will or another document. The appointed trustee holds the responsibility of managing the trust according to its terms.

  • Variation of Trusts: The Variation of Trusts Act (R.S.N.S. 1989, c. 486, s. 3) allows for variations of trust terms, but only with the consent of all beneficiaries and court approval if necessary.

  • Perpetuities: The Perpetuities Act (S.N.S. 2011, c. 42, s. 6) addresses the duration of trusts, stipulating that any changes to a trust, such as variation or revocation, must be confirmed by the Supreme Court of Nova Scotia.

  • Investment Standards: Trustees must adhere to prudent investment principles under the Trustee Act (R.S.N.S. 1989, c. 479, s. 3A). This includes making investments with reasonable care, skill, and judgment, and ensuring diversification as needed.


2. Common Law Requirements

  • Certainty of a Trust: The Supreme Court of Canada in Air Canada v. M&L Travel Ltd. emphasized that for a trust to be valid, it must have three essential certainties: intent, subject-matter, and objects. This means that there must be a clear intention to create the trust, a clearly defined property for the trust, and clearly identifiable beneficiaries (MacGregor's Custom Machining Limited v. Sanikiluaq Development Corporation, 2021).

  • Testamentary Capacity: In the case of Skinner v. Farquharson, the Supreme Court reinforced that the testator must have the mental capacity to understand the nature of their will and the claims of their potential beneficiaries. A lack of testamentary capacity could render the trust invalid.

  • Trustee Duties: Trustees have fiduciary duties to act in the best interests of the beneficiaries. They must be honest, exercise reasonable care, and not profit from the trust unless expressly authorized (Canada v. Canada North Group Inc., 2021). Trustees are also required to disclose the existence of the trust to beneficiaries if withholding such information would cause them harm (Valard Construction Ltd. v. Bird Construction Co., 2018).


3. Special Types of Trusts

  • Henson Trusts: These are discretionary trusts that are commonly used to provide for beneficiaries with special needs. A Henson Trust allows the trustee to have discretion over distributions, ensuring that the trust cannot be collapsed by the beneficiary under the rule in Saunders v. Vautier. In S.A. v. Metro Vancouver Housing Corp., the Supreme Court confirmed the importance of the trustee’s discretion in managing these trusts.


Conclusion

When drafting a trust in a will, it’s essential to ensure that the trust is structured in compliance with both statutory and common law principles. By carefully considering factors such as the writing requirement, trustee duties, and the certainties of the trust, you can create a legally valid and effective trust that meets your objectives. Additionally, understanding special types of trusts, like Henson Trusts, can be particularly important if you have specific needs for certain beneficiaries.

As always, it's important to consult a legal professional to ensure that the trust is properly drafted and aligned with current laws and your wishes.

Please note that the information provided in this blog post is for general informational purposes only and is not intended as legal advice. Reading this post does not create an attorney-client relationship, and the information shared here should not be relied upon as a substitute for professional legal counsel. If you require personalized legal advice regarding estate planning or any related matters, we encourage you to schedule a consultation with Ross Estate Law to discuss your unique circumstances.


 
 
 

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