The role of Trustee (whether under an inter vivos Trust or an Estate Trustee under a Will) is not to be entered into lightly. It brings with it tremendous responsibility and, flowing from that responsibility, risk of liability for any misstep.
One of the central legal obligations of a Trustee is to remain neutral among beneficiaries – to treat them with an “even hand” and not favour one over others.This duty can to some degree be modified under the terms of a Trust or Will – for example, by granting to the Trustee discretion (sometimes “sole and unfettered” or “absolute” discretion) in deciding how to share trust proceeds among certain beneficiaries.Even where this discretionary power is granted in the terms of the Trust or Will, a Trustee can be called to account if she exercises the discretion in an improper manner.In determining whether a Trustee has properly exercised the discretion granted to her, the Court will first decide if the Trustee has acted in good faith. If so, the exercise of discretion is only to be interfered with by the Court if: (a) the result achieved is not authorized by the terms of the Trust or (b) the Trustee took into account considerations that she ought not to have, or failed to take into account considerations she ought to have.This is of course fairly broad language which opens the door to claims by unhappy beneficiaries that a Trustee has improperly exercise the discrection granted to her.It is nonetheless clear that the law permits Trustees empowered with the exercise of discretion to depart from the ‘even hand’ rule and make choices that favour one beneficiary over another.For a detailed discussion of this issue, see Justice Cullity’s decision of Edell v. Sitzer.
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