If you are asked to be a trustee for an estate, think about it carefully before you agree. It’s not some honorary role, like being a godparent. There’s a lot involved.
A trustee functions in an environment of great trust and great responsibility, with many legal implications. The trustee's actions are governed by provincial legislation, the principles of the trust relationship as established in common law, and the authority originally granted in the will. If you fail to act appropriately, you could be held personally liable by the estate’s beneficiaries. So in taking on the role, you are exposing yourself to some potential risk.
A trustee is responsible for the annual reporting requirements for trusts, as mandated by the Income Tax Act and must ensure the payment of any taxes owing by the trust. The basic duties and responsibilities of a trustee are established in law, and include:
The duty of care: A trustee has the responsibility at all times to act in a reasonable and prudent manner.
The duty to act in the beneficiary's best interests and to avoid all conflicts of interest: Trustees may not profit personally from their administrion of the trust, and must treat all beneficiaries without favouritism.
The duty to act personally: While a trustee may employ others to provide professional advice or administrative services to the trust, the trustee's ultimate responsibility for the trust cannot be delegated.
Trust and competence are the key qualities required of a trustee. Those having been established, possible trustees would include family members, friends, trust companies, lawyers and accountants.
Often, joint trustees are named, with one being a family member or friend and the other being a professional who will look after all the details.
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