Estate Planning

To Vary a Trust or Not to Vary a Trust: Does a Statute have an Answer?

By Hull & Hull LLP

Those wishing to vary a trust in Ontario, can look to the Variation of Trusts Act (R.S.O. 1990, c. V.1) (Act) for the authority to do so. Although the Act is surprisingly only one section in length, don’t let the length fool you.

Essentially, the Act permits the Court to approve a variation of a trust under a will, settlement or other disposition on behalf of minor, unascertained, unborn or contingent beneficiaries if the variation, in the words of the Act, “appears to be for the benefit” of those persons.

While relying on the Act for jurisdiction to make a variation, there are many things to consider in pursuing a variation such as the procedure to follow and the criteria to meet in order to have the variation approved. 

In the well-known case of R v. Irving, (1975), 11 O.R. (2d) 442 (H.C.), the Court set out three criteria to consider in determining whether to approve a variation, namely: (i) does the variation keep alive the basic intention of the testator or settler?, (ii) does the variation benefit those for whom the Court is asked to consent?, and (iii) whether a prudent adult motivated by intelligent self-interest and sustained consideration of the expectancies and risks of the variation, would likely accept it?

There are a number of cases that have considered these criteria; too many to go into in this blog. Suffice it to say that the Act does provide an answer to the question as to whether one can vary a trust, but the answer is only a partial one as the Court will also consider criteria needed to be met in determining whether to approve a variation.

Enjoy the long weekend (and last of the summer), school starts next Tuesday.

Craig

Full post as published by Toronto Estate Law Blog on August 29, 2008 (boomark / email).