Considerations for Trusts for Minor Children
In the recent decision of Gall Estate v Turpin, 2022 ABQB 25, a deceased mother left her entire estate to her son in trust until he turned 25. The deceased mother and the child’s surviving father had separated two years prior to the mother’s passing.
The father applied for a portion of the estate to be transferred to him for proper maintenance and support of the child pursuant to section 88 of the Wills and Succession Act:
88(1) If a person
(a) dies testate without making adequate provisions in the persons’ will for the proper maintenance and support of a family member,
the Court may, on application, order that any provision the Court considers adequate be made out of the deceased’s estate for the proper maintenance and support of the family member.
The trust was set up such that the trustee (the deceased mother’s friend) had express discretion pay any amounts of the income or capital of the estate for the maintenance, education, advancement or benefit of the child, prior to the child turning 25. The Court denied the father’s application for proper maintenance and support for the child, having found that the deceased mother satisfied her legal and moral duties to provide for her son in leaving her entire estate to him. The Court described that the father’s concern with the trustee’s exercise of discretion to provide for the maintenance, education, advancement or benefit of the child did not mean that the deceased mother died without making adequate provision for proper maintenance of the child.
The father also applied to have the trustee removed, arguing that the trustee’s personal animosity towards him was preventing her from exercising her obligations as a trustee to the detriment of the child. The trustee had refused all requests for funds made by the father on the child’s behalf, which the Court found to be unnecessarily restrictive and that the standards set for any requests for funds were excessive.
The trustee argued in response that she was acting on conversations she had with the deceased mother as to how she wanted her estate managed. However, the details of the trustee’s conversations with the deceased mother were not permitted as evidence. The Court confirmed the well-established principle that outside evidence cannot be admitted to contradict, add to or explain the contents of a will. Rather, the Court opined that “had [the deceased mother] not wanted any of the proceeds of the estate paid for the benefit of the child prior to him turning 25, she could have said so” but that she did not, and rather, she provided discretion to provide for the maintenance, education, advancement or benefit of the child.
The Court directed the trustee to exercise her discretion in a manner that gave effect to the intention expressed in the will. The trustee’s discretion was to be used to ensure that any requests clearly outside the scope of expenses associated with the maintenance, education, advancement or benefit were not allowed. The trustee was not to use her discretion to second guess the father’s parenting choices or to micromanage the father’s financial affairs.
The Court found that the trustee’s mistakenly over restrictive approach to her discretion over the estate assets did not require her immediate removal as a trustee. In coming to this decision, the Court referenced prior jurisprudence confirming that the “sanction of removal is intended not to punish the trustee for past misconduct but rather to protect the assets of the trust and the interests of the beneficiaries”. The Court was ultimately satisfied that with the clarification provided, the trustee would be able to exercise her discretion appropriately going forward.