Changing a Trust in Ontario: Court Approval Under the Variation of Trusts Act

A trust written years ago may no longer fit. The trustees may need wider powers, the beneficiaries may want the terms changed, or the whole arrangement may have outlived its purpose. The difficulty is that a trust often has beneficiaries who cannot agree to a change: children, people who lack capacity, or people not yet born.

In Ontario, the Variation of Trusts Act gives the Superior Court of Justice a way to approve a change on behalf of those people. This article explains who the court can speak for, the test it applies, who must be told, and a related option for trustees who just need guidance.

What the Variation of Trusts Act allows

Under the Variation of Trusts Act, the Superior Court of Justice may approve an arrangement that varies or revokes a trust, or that enlarges the trustees' powers. The court gives that approval on behalf of people who cannot consent for themselves.

In plain words, the court can step in for a beneficiary who is unable to say yes. What a change would mean without that approval depends on the trust and the people involved, so it is worth confirming with a lawyer.

Who the court can approve a change for

The Act names four groups the court can consent for:

• Minors.
• Incapable persons.
• Unborn persons.
• People who may have an interest under a discretionary power in the trust.

An adult with capacity who has a clear interest is generally able to give their own consent. The court's role is aimed at the people who cannot. Whether a particular beneficiary falls into one of these groups depends on the wording of the trust and the facts, so it is worth confirming with a lawyer.

The benefit test

The court will not approve a variation on behalf of a minor, incapable person or unborn person unless it appears to be for that person's benefit. It is not enough that the adults all want the change or that it helps the family as a whole.

This means a proposal should be able to show what the vulnerable beneficiary gains. Typical questions a court might expect you to address include how the person's share is affected, whether any protection is lost, and why the change is better for them than leaving the trust alone.

The benefit test, as the Act states it, applies to minors, incapable persons and unborn persons. How it is applied to people with possible interests under a discretionary power depends on the facts of the case.

Why the Office of the Children's Lawyer is involved

The Office of the Children's Lawyer (OCL) must be served with an application to vary a trust where a minor or unborn person has an interest. The OCL represents the child and does not take instructions from the parents.

That can surprise families. Even if a parent supports the proposed change, the OCL looks at the matter from the child's side. A minor in Ontario is a person under 18. A child generally receives their share at 18, or at the age stated in the will or beneficiary designation, so it is worth checking what the trust says about when a child's share is paid.

Widening trustee powers, and the advice and direction option

The Trustee Act sets out investment powers for trustees, but they do not authorize or require a trustee to act inconsistently with the terms of the trust. If the trust document limits what a trustee can do and the trustees need broader room, the arrangement may need to be varied to enlarge their powers.

A different tool applies when the trustee does not want to change the trust but needs direction. A trustee may apply to the Superior Court of Justice, without starting an action, for the court's opinion, advice or direction on managing trust property.

What to do next

Before approaching the court, get clear on what you want changed and who is affected. A lawyer can tell you whether a variation, a request for directions or another route fits your situation.

• Get a complete copy of the trust document and any amendments.
• List every beneficiary, including children, anyone who may lack capacity, and any future or unborn beneficiaries.
• Write down the change you want and how it helps each person who cannot consent.
• Confirm whether any beneficiary will need to be represented, and expect the OCL to be involved if a minor or unborn person has an interest.
• Ask a lawyer whether a variation or an application for advice and direction is the better fit.

Frequently asked questions