How Alberta’s new Trustee Act will impact settlors, trustees and beneficiaries

Authors: Sam Amelio, Harmanjit Mavi, Jayde K. Morello

Alberta’s new Trustee Act (the “New Act”) received Royal Assent and came into force on February 1, 2023, streamlining the province’s trust laws and imposing new reporting requirements on trustees.

The New Act applies to trusts created before and after the coming-into-force date and broadens the scope of Alberta’s trustee legislation. The previous act dealt mainly with testamentary trusts, but the New Act also covers real estate investment trusts, royalty trusts and non-charitable trusts.

Legislation aims to clarify trust laws

A trust is a legal document created by a person (the settlor) that allows another person or persons (the trustees) to hold property for the benefit of others (the beneficiaries). For example, a testamentary trust created in a person’s will can leave a gift to a beneficiary but appoint a trustee to hold and administer the gift on the beneficiary’s behalf (often until a beneficiary reaches a particular age).

One of the key aims of the New Act is to make the law of trusts more clear in an effort to reduce litigation and limit the need to seek advice and direction from the Court. For instance, the New Act provides a process for trustees to resign, allows for the appointment of temporary trustees, and provides default provisions for trusts that do not contain extensive terms, thereby limiting the need to go to Court.

New reporting duties

The New Act also serves to increase transparency between trustees and beneficiaries by imposing wide-ranging reporting duties upon trustees. Of particular note, the New Act requires trustees to provide to certain qualified beneficiaries a financial reporting of the trust each fiscal year. These duties can be onerous, and in many instances can defeat a settlor’s intentions where privacy is a concern.

These new obligations can raise complicated issues for settlors, trustees and beneficiaries alike. Settlors may wish to limit the list of beneficiaries under a trust or explore possible ways to comply with the New Act while also achieving their objectives for the trust. Trustees will need to ensure that they do not inadvertently subject themselves to liability by failing to fulfil their newly imposed duties. Beneficiaries will also want to be familiar with their rights to receive financial reports from trustees and may wish to consider how these reports may factor into disclosure in the context of divorce litigation. We’ll explore these topics in future blog posts.

Now more than ever, it is important for parties to a trust in Alberta to obtain legal advice. The MLT Aikins Estate Planning & Administration group has extensive experience advising individuals, businesses and charities on trust planning and administration. Contact us to learn more.

Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.