Trustee Duties Under BC Law: What a Trustee Must Do

Being named a trustee can feel like an honour and a burden at the same time. You are managing property for other people, and you can be held to account if you handle it badly.

This article explains, in plain terms, the main standards the British Columbia Trustee Act sets for investing, delegating, accounting and being paid. It is general information, not advice on your particular trust.

This article covers the law of British Columbia.

Where a trustee's duties come from

A trustee's duties come from several places: the trust document or will, the Trustee Act, and general legal principles developed by the courts. The trust document matters a great deal, because it can add instructions, limit your powers or set your pay.

Duties such as acting loyally for the beneficiaries and treating them even-handedly come mainly from the trust document and court decisions, not from the Trustee Act itself. If you are unsure how they apply to your situation, a lawyer can confirm.

Investing trust property prudently

A trustee may invest trust property in any form of property or security in which a prudent investor might invest. That does not allow an investment that is inconsistent with the trust itself.

When investing, you must exercise the care, skill, diligence and judgment that a prudent investor would exercise. The Act looks at the overall plan rather than each decision alone.

• You are not liable for an investment loss if your conduct conformed to a prudent plan or strategy with a reasonable assessment of risk and return.
• Investments are not judged one by one, and gains may offset losses when damages are calculated, except where dishonesty is involved.
• You may delegate investment authority to an agent to the degree a prudent investor could under ordinary business practice.
• If you delegate, you must set the investment objectives and act prudently in choosing the agent, setting the terms, communicating objectives and monitoring performance.
• A trustee who delegates in that way is not liable for the agent's decisions.

There is an exception: you cannot delegate investment authority where the trust requires you to act personally.

Passing accounts

Executors, administrators, testamentary trustees and judicial trustees must obtain a court order passing their first accounts within 2 years of the grant or appointment. Other trustees may pass first accounts at any time.

The requirement does not apply if all beneficiaries approve the accounts in writing, or if the court directs otherwise. Separately, once a beneficiary gives you notice, you must pass accounts annually. Keeping clean records from the first day makes every one of these steps easier.

Being paid, and being excused

A trustee or executor may receive a fair and reasonable allowance not exceeding 5% of the gross aggregate value of the estate. An annual care and management fee not exceeding 0.4% of the average market value of the assets may also be applied for. These limits do not apply where the trust instrument sets the trustee's allowance.

If you make a mistake, the court may relieve you from liability for a breach of trust, but only if you acted honestly and reasonably and ought fairly to be excused. That is a discretion, not a right, so it is not something to count on.

What to do next

• Read the trust document or will carefully and note any limits on your powers or any set allowance.
• Keep a separate bank account and a written record of every receipt and payment.
• Write down your investment objectives and the reasons for each major decision.
• If you want help with investments, choose any agent carefully and keep monitoring them.
• Diarize the 2-year date for passing accounts, and consider asking beneficiaries for written approval.
• Speak with a lawyer before paying yourself or if a beneficiary raises a concern.

Frequently asked questions