Modernizing a 1970s trust meant asking two beneficiaries to agree on risk

The situation

'Why can't I just move some of this into something that isn't losing money every year,' Kumari asked, sitting across from us with a trust statement that had not meaningfully grown in longer than she could comfortably remember. Her late husband had written his will in the 1970s, setting up a trust to support her for the rest of her life, with whatever remained eventually passing to their two children. He had been a cautious man, and the will named a specific, narrow list of permitted investments, government bonds and a small handful of similarly conservative instruments, intended at the time to protect Kumari from risk.

Decades later, that protection had become its own problem. The trust, worth somewhere between $1,200,000 and $2,500,000, had spent years generating returns that, once inflation was accounted for, barely held their value, let alone grew it. Kumari, now in her eighties, depended on the trust's income for a comfortable retirement, and had begun watching that income shrink in real terms year after year while the world it needed to fund kept getting more expensive.

Her two children, both financially established in their own right, had different reactions to the idea of changing anything. Yael, a police sergeant with a pension of her own and a naturally conservative streak, worried that loosening the trust's investment rules meant exposing her mother's only income source to the kind of market swings a person in her eighties could not afford to absorb. Dov, an optometrist who managed his own practice's investments actively, saw the trust's rigid terms as an obvious relic, money sitting still while it should have been working, and wanted the restriction lifted entirely in favour of a standard, diversified portfolio.

Kumari did not want to referee a disagreement between her children. She wanted enough income to live comfortably, she wanted whatever eventually passed to Yael and Dov to be worth something real by the time it did, and she wanted the answer to her question settled by someone other than her own family.

There was a fourth voice in the room, in a sense, that neither Yael nor Dov could speak for directly: the corporate trustee named in the original will, a role the bank had held since the trust was created and had continued to administer, year after year, strictly according to the letter of a document written before either of Kumari's children had finished school. The trustee had no authority to deviate from the named investments on its own initiative, however plainly they had stopped serving their purpose, and had said as much to Kumari more than once when she asked whether anything could be done. Its position, cautious and procedural, was itself part of the problem Kumari's question was really asking about.

The problem

A trust's investment terms are not automatically updatable just because circumstances change. A trustee is generally bound by the instructions the will or trust document actually contains, and a restriction naming specific permitted investments overrides the more flexible, modern investment standard that would otherwise apply under Ontario's trustee legislation. That flexible standard, often called a prudent investor approach, lets a trustee build a diversified portfolio suited to the beneficiaries' actual needs. Kumari's trust had been drafted specifically to avoid that flexibility, on the theory, reasonable enough in the 1970s, that a fixed list of safe investments was the surest way to protect a widow's income.

Changing those terms generally requires either the agreement of every person with an interest in the trust, present and future, or a court's approval where full agreement cannot be reached, or where some interests, like those of unborn or unascertained beneficiaries, cannot practically consent at all. Here, every interested party was a known, adult person, Kumari, Yael, and Dov, which simplified the picture considerably but did not remove the need for either unanimous agreement or a court application, since a trustee cannot simply decide on its own to ignore the will's plain instructions.

The complication was that unanimous agreement was not automatic. Yael and Dov were not adversaries exactly, both wanted their mother's income secured and both stood to inherit whatever remained, but they wanted different things from the same pool of money. A portfolio built to satisfy Yael's caution would generate less growth than Dov wanted to see over the years he expected to wait for his inheritance. A portfolio built to satisfy Dov's appetite for growth would introduce more short-term volatility than Yael was willing to accept around her mother's only income source.

Kumari's own interest sat in the middle of theirs, and not in a way either child's position fully protected. She needed dependable income now, which argued against Dov's growth-heavy preference, but she also needed that income to keep pace with rising costs over what could be another decade or two of retirement, which argued against Yael's instinct to change as little as possible. Any variation that satisfied one child's concern risked leaving Kumari worse off in the dimension that concern ignored.

The corporate trustee added a fourth, quieter interest to the mix. Its role was to administer the trust faithfully, not to take sides in a family disagreement about risk, and it was understandably reluctant to endorse any variation without a clear, defensible basis for departing from the original terms. That reluctance was not obstruction, it was the trustee behaving exactly as it should, but it meant the family could not simply agree among themselves and expect the trustee to fall in line. Whatever emerged from the negotiation needed to satisfy the trustee's own duty to administer the trust properly, not just the three beneficiaries' competing preferences.

What we did

1. Confirmed that a court application, rather than an informal agreement among the three of them, was the more reliable path forward, since a court-approved variation protects the trustee from any later suggestion the change was improperly made. All three were amenable in principle to some change, but their different priorities made it unlikely they would settle every detail of a new investment mandate without a framework to negotiate against. That decision set the process the family would actually follow.
2. Prepared the application to vary the investment restriction, setting out the trust's history, its underperformance relative to inflation over the decades since it was drafted, and the reasoning behind the original restriction, so the court understood both why the limitation existed and why it no longer served its intended purpose. That context mattered because a court varying a trust's terms wants to see the change serves the same underlying goal the original drafter had, protecting the beneficiary, not simply setting aside instructions someone now finds inconvenient.
3. Assembled decades of account statements showing the trust's actual returns measured against the Consumer Price Index over the same period, to support the application with more than a general impression that a 1970s-era portfolio might be out of date. That evidence gave the court concrete proof of real, sustained underperformance rather than an assertion, and it became the factual foundation the rest of the application, and the eventual negotiation between Yael and Dov, was built on.
4. Arranged for Yael and Dov, both of whom had standing as beneficiaries, to receive independent legal advice on the proposed variation, since a change of this kind needed each of their genuinely informed consent rather than a family compromise reached under pressure from their mother or each other. That step meant neither could later argue they had been talked into a position, and it gave the eventual agreement a foundation solid enough to bring before the court with confidence.
5. Worked with a financial advisor experienced in trust portfolios to model several investment mandates, each showing projected income for Kumari and projected capital growth under a range of market conditions, because translating the family's disagreement from an abstract debate about risk into concrete numbers was the only way Yael and Dov could actually evaluate what they were being asked to accept. Those models became the shared reference point the rest of the negotiation was built around.
6. Negotiated a split mandate using those models, allocating a defined majority of the trust to conservative, income-generating investments to secure Kumari's day-to-day needs, with the remainder invested in a diversified, moderate-growth portfolio to address the long-term erosion Dov was worried about, without exposing the whole trust to the volatility Yael could not accept. Neither child received the mandate they would have chosen alone, which was itself the clearest sign the compromise reflected their mother's actual interests rather than either of theirs.
7. Brought the agreed variation before the court for approval, with both children's independent counsel confirming their informed consent on the record, and secured an order formally varying the trust's investment restriction in line with the negotiated mandate. The order gave the corporate trustee the clear legal authority it had been waiting for, replacing its earlier caution with a documented basis to administer the trust under the new terms.
8. Built a review mechanism into the new mandate, requiring the trustee to reassess the split periodically against Kumari's actual income needs and report the results of that reassessment to Yael and Dov as well as to Kumari, so the arrangement could adjust over time as markets and her needs changed, rather than becoming just as rigid, in its own way, as the terms it replaced.

The outcome

The court approved the variation, and the trust's rigid 1970s restriction was replaced with the negotiated split mandate. Kumari's income has kept closer pace with her actual cost of living since the change, though it remains tied to a conservative core allocation rather than the more flexible standard Dov initially wanted to see applied to the whole trust.

Neither child got the mandate they would have chosen alone. Yael accepted a portion of the trust in growth-oriented investments she would not have selected on her own, trading some of her preferred certainty for a structure her mother's advisors judged necessary against long-term inflation. Dov accepted a conservative core large enough that the trust will grow more slowly than a fully diversified portfolio might have, trading faster growth for his mother's day-to-day security and his sister's comfort with the plan.

The periodic review mechanism has already prompted one adjustment to the split since the order was made, a small increase in the conservative allocation after a volatile stretch in markets, showing the framework working as intended rather than locking the family into a single decision the way the original 1970s terms once had.

The corporate trustee's position also shifted, once the variation was in place. Rather than administering the trust as a passive custodian of a fixed list of instruments, it took on a more active role in monitoring the split mandate, reporting to Kumari and, at scheduled intervals, to Yael and Dov as well, on how each portion of the portfolio was performing against its purpose. That reporting has become part of what keeps the arrangement stable, giving both children visibility into decisions that used to happen, if they happened at all, without anyone outside the trustee's own office paying much attention.

Kumari, for her part, says the change has mattered less in the numbers on her monthly statement than in not having to wonder, every time she opened one, whether the trust her husband built to protect her was quietly falling behind everything it was meant to cover.

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