- A trustee must act solely in the interests of the trust's beneficiaries or purposes and must not take a personal benefit unless the law or the trust instrument expressly permits it.
- A will can expressly allow a named trustee to also take as a beneficiary, but the trustee's duties of good faith, prudence and impartiality still apply.
- Beneficiaries can apply to the court if a trustee fails in a duty, and the court can order performance or remove the trustee.
It is very common for a family member to be named both trustee and beneficiary of a testamentary trust. A parent's will might name an adult child to manage the trust and also leave that child a share. That can feel natural, but it puts one person on both sides of the table.
This article explains how Alberta's Trustee Act, SA 2022, c T-8.1, deals with that overlap. The Act replaced the former Trustee Act and came into force on February 1, 2023. It applies generally to trusts, including those created before it came into force.
This article covers the law of Alberta.
The general conflict rule in section 28
Under section 28 of the Trustee Act, a trustee must act solely in the interests of the objects of the trust. The trustee must not knowingly allow a conflict between personal interest and trust duties, or a personal or third-party benefit, unless the law or the trust instrument permits it. "Objects" means the beneficiaries or the purposes of the trust.
The Act has no separate section on a trustee who is also a beneficiary, or on a trustee buying trust property. Because section 28 applies to every trustee, the general personal-benefit rule in section 28(2) covers those situations. In practice, a trustee-beneficiary must not use the office to gain a personal benefit beyond what the law or the trust instrument expressly permits.
What a will can allow
A will or trust deed that expressly allows a named trustee to also take as a beneficiary, and to act despite that interest, is permitted by the wording of section 28(2), which says "unless... the trust instrument expressly permits". Section 3 also gives the trust instrument priority over a contrary provision of the Act, unless the Act provides otherwise.
There is a limit. Some rules in the Act cannot be overridden by the instrument. Section 84 is one example. So the wording of the will matters, and a general reference to the trustee's powers may not be the same as an express permission. A lawyer can read the actual wording and tell you what it allows.
Duties that still apply to a trustee-beneficiary
Even where the will permits the dual role, the trustee is not free to favour themselves. The core duties continue:
- Act in good faith and in accordance with the terms of the trust, the best interests of the objects of the trust, and the Act.
- Subject to s. 35 of the Trustee Act, 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.
- Invest trust funds prudently, aiming for a reasonable return while avoiding undue risk, and review investments periodically.
- Act impartially between classes of beneficiaries.
- Do not delegate the discretion to distribute trust property to beneficiaries.
The last point matters when the trustee is also a beneficiary. A trustee who holds a discretion over payments to others, and to themselves, must exercise it personally and with those duties in mind.
Court approval, relief and limits on exemption clauses
If a conflicted act is proposed, a trustee or qualified beneficiary can apply to the court. The court may permit an act that would otherwise breach the conflict rules, or excuse the trustee from liability, if that is in the best interests of the objects. Notice must go to qualified beneficiaries, and in certain cases to the Public Trustee or the Minister.
If a breach of trust has happened, the court may relieve a trustee wholly or partly from personal liability if the trustee acted honestly and reasonably and ought fairly to be excused. A beneficiary, trustee or secured party may apply. An exemption clause in a trust instrument generally relieves a trustee of liability according to its terms, but the court may declare it ineffective where the trustee's conduct was so unreasonable, irresponsible or incompetent that the trustee ought not to be relieved.
| Situation | What the Act provides |
|---|---|
| Trustee wants approval for a conflicted act | Court application by trustee or qualified beneficiary, with notice |
| Trustee acted honestly, reasonably and ought fairly to be excused | Court may relieve from liability |
| Trust has an exemption clause | Applies by its terms, unless the court declares it ineffective |
What beneficiaries and trustees can do next
A trustee or beneficiary may apply to the court to determine whether a trustee has failed to perform a duty or to consider a power in good faith. The court may order performance or remove the trustee. Section 22 also lets the court remove a trustee in listed circumstances, including refusal to comply with a court order under section 81(2). A trustee who is unsure what to do may apply to the court for directions, and following those directions discharges the duty unless they were obtained by fraud, wilful concealment or misrepresentation.
- Read the will and look for wording that expressly lets the trustee take as a beneficiary.
- Ask for the trustee's report for each fiscal period; qualified beneficiaries are entitled to it within 2 months after the period ends.
- Keep clear records that separate trustee decisions from personal interests.
- Before buying trust property or paying yourself, get legal advice and consider asking the court for approval.
- If you have concerns, speak with an Alberta lawyer before applying to the court.
Frequently asked questions
Can the same person be both trustee and beneficiary in Alberta?
The Trustee Act has no separate rule against it. The general conflict rule in section 28(2) applies, so any personal benefit must be permitted by law or expressly permitted by the trust instrument. A will that expressly allows it is permitted by the wording of section 28(2).
Can a trustee buy property from the trust?
The Act has no separate section on a trustee buying trust property, so the general personal-benefit rule in section 28(2) applies. A trustee or qualified beneficiary can ask the court to permit an act that would otherwise breach the conflict rules, if that is in the best interests of the objects.
What if a trustee-beneficiary favours themselves?
A beneficiary or trustee can apply to the court to decide whether a duty was not performed. The court may order performance or remove the trustee. The court may also relieve a trustee wholly or partly from personal liability for a breach of trust if the trustee acted honestly and reasonably and ought fairly to be excused.
Can a will excuse a trustee from all liability?
An exemption clause generally works according to its terms. However, the court may declare it ineffective where the trustee's conduct was so unreasonable, irresponsible or incompetent that the trustee ought not to be relieved.
Sources
- Trustee Act, SA 2022, c T-8.1, ss. 1(p), 2 (King's Printer) — kings-printer.alberta.ca
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
This is a wills & estates question
A single will with us is from $628.95, tax included. Third-party fees are extra.