How Is a New Trustee Appointed When a Trustee Dies or Won't Act in Ontario?

A trust only works if someone is there to run it. When a trustee dies, moves away, refuses the job or can no longer manage it, the beneficiaries and any remaining trustees are often left unsure who can step in and how.

Ontario's Trustee Act sets out a practical process for this. In many cases a replacement can be appointed by a simple written document, without going to court. This article explains when that works, who signs, what happens if the only trustee dies, and when the court is needed.

When a new trustee can be appointed in writing

Under section 3(1) of the Trustee Act, a new trustee may be appointed in writing in four situations. The appointment is made by a document, not by a court order, which is often quicker and cheaper than an application.

• The trustee dies.
• The trustee stays out of Ontario for more than 12 months.
• The trustee refuses to act or is unfit to act.
• The trustee is incapable of acting.

Whether a particular situation fits one of these categories can depend on the facts. For example, deciding that a trustee is unfit or incapable of acting is not always clear-cut, and it is worth getting advice before relying on that ground.

Who has the power to appoint

The power to appoint belongs first to the person nominated in the trust document. If the document names no one, the surviving or continuing trustees appoint, or the personal representatives of the last surviving trustee do.

Read the trust document or will carefully first. It may name a replacement, set out who chooses one, or limit who can serve. The Trustee Act's investment powers, for example, do not override the terms of the trust, and the same habit of checking the document first applies here.

What happens when the only trustee dies

If a sole trustee dies, the trust does not stop. Until new trustees are appointed, the personal representatives of that trustee may exercise the trustee's powers. This helps keep things such as paying bills or protecting property from stalling.

A sole or last surviving trustee can also appoint a successor trustee by will. If your trustee left a will, check whether it names someone to take over the trust. If it does not, the written appointment route above or the court route below may be needed.

The personal representatives are not automatically the new trustees. Their role is to hold the powers on a temporary basis until a replacement is in place, so it is sensible to deal with the appointment promptly.

When the court is involved

The Superior Court of Justice can appoint a new trustee or trustees, either to replace existing trustees or to add to them, and even where no trustee exists. This is the court route for replacing a trustee. It is commonly considered when no one has the power to appoint, when the people with the power cannot or will not use it, or when the parties disagree about who should serve.

Executors are treated separately. For personal representatives, the Trustee Act expressly lets the Superior Court of Justice remove them on any ground on which it could remove any other trustee, and appoint someone else in their place. Removing an executor for misconduct is a distinct topic and is not covered here.

A trustee who is unsure how to manage trust property can also apply to the Superior Court of Justice, without starting an action, for the court's opinion, advice or direction. That can be a useful step if a trustee is unsure how to proceed during a transition.

Minors, unborn beneficiaries and the Children's Lawyer

Many trusts benefit children or people not yet born. In Ontario a person stops being a minor at 18. The Office of the Children's Lawyer must be served with an application to vary a trust, or to pass estate accounts, where a minor or unborn person has an interest, and it represents the child rather than taking instructions from the parents.

If a change in trustees is tied to a wider change in the trust, the court may approve an arrangement on behalf of minors, incapable persons and unborn persons. It can enlarge the trustees' powers, but it will not approve a variation for a minor, incapable or unborn person unless it appears to be for that person's benefit. Whether the Children's Lawyer must be involved in a straightforward trustee appointment depends on the facts and the type of application, so confirm this with a lawyer.

What to do next

• Find the trust document or will and read any clause about replacing trustees.
• Confirm which of the four situations applies: death, absence from Ontario for more than 12 months, refusal or unfitness, or incapacity.
• Identify who has the power to appoint: the named person, or otherwise the continuing trustees or the last trustee's personal representatives.
• If a sole trustee has died, find out whether their will names a successor and who their personal representatives are.
• Keep a record of what happens to trust property while the position is vacant.
• If no one can or will appoint, or beneficiaries disagree, speak to a lawyer about a court application.

A lawyer can read the trust document, confirm whether a written appointment is valid and tell you whether a court application is the better route in your situation.

Frequently asked questions