What Are the Alberta Rules for How a Trustee Can Invest Trust Money?
This answer covers the law of Alberta.
Under Alberta's Trustee Act, a trustee must invest trust funds prudently, aiming for a reasonable return while avoiding undue risk, and must review the investments periodically. The current law is the Trustee Act, SA 2022, c T-8.1, which replaced the former Act and was proclaimed in force on February 1, 2023.
Subject to section 35, which governs investments, a trustee must use the care, diligence and skill that a person of ordinary prudence would use in dealing with another person's property. A trustee with specialized or professional skill is held to a higher standard. Investment planning must also consider fairness between different classes of beneficiaries. How widely the money must be spread across investments is not something to assume, so confirm it with a lawyer.
The trust document generally prevails over the Act unless the Act provides otherwise, so it can change many of these rules. If an investment loses money, a trustee is not liable if a reasonably skilled and prudent trustee could have made the same decision. A court may also relieve a trustee from personal liability if the trustee acted honestly and reasonably and ought fairly to be excused. Whether you would be personally responsible depends on the facts.
Key takeaways
- A trustee must invest trust funds prudently for a reasonable return while avoiding undue risk, and must review the investments periodically.
- The trustee's care, diligence and skill is measured against a person of ordinary prudence, and a trustee with professional skill is held to a higher standard.
- The trust document generally prevails over the Trustee Act unless the Act provides otherwise, so the wording of the will or trust deed matters.
- A trustee is not liable for an investment loss if a reasonably skilled and prudent trustee could have made the same decision, and the court can sometimes excuse an honest, reasonable trustee.