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Figure 1.1: Types of Fiduciaries, Responsibilities, and How Appointed ................................... 1-6
Figure 1.2: Canada’s Court System – How the Courts Are Organized .................................... 1-9
Figure 1.3: Quebec Only: Books of the Civil Code of Quebec .............................................. 1-12
Introduction to the Law of Estates and Trusts
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Chapter 1
Introduction to the Law of Estates and Trusts
Learning Objectives
There are a number of situations where someone may be appointed to manage the
affairs of another person while that person is alive or upon that person’s death. Each
role has a different name and has different responsibilities. The names also vary
between provinces and territories. This course uses the term “fiduciary” as a generic
term to describe someone entrusted to assume one of these roles.
This chapter introduces students to three fiduciary roles and the sources of the law that
guide each of these fiduciaries when carrying out their many responsibilities. The three
roles are:
1. executors (liquidators in Quebec) to manage the estate of a deceased person,
2. trustees to manage a trust, and
3. Substitute decision-makers (a generic term for someone with authority to
manage the financial or personal affairs of a person who is incapable).
Upon completing this chapter students will be able to:
Identify the fiduciary roles responsible for the administration of estates and trusts
Identify the fiduciary roles responsible for making decisions on behalf of an
incapable person
List the sources of law governing each type of fiduciary
Locate legislation relevant to estate and trust administration in their province
Locate legislation relevant to substitute decision-making in their province
List the federal courts in Canada
List the provincial courts in their province
Recognize when laws of another jurisdiction may be relevant to the
administration of an estate or trust
Distinguish the concepts of domicile and residence
Distinguish real property and personal property (immovables and movables)
Identify the legal professionals in their province
This is an introductory chapter. Students are expected to know the generic terms used
within the text to describe different fiduciary roles as well as the terminology used in
their own jurisdiction as indicated within the text.
Quebec Only: Although these fiduciaries each have a name, depending on the nature
of the responsibility, they are collectively referred to as administrators of the property of
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others and they are governed by the general rules pertaining to the administration of the
property of others. These general rules are reviewed throughout this course.
For purposes of this course, the generic term “fiduciary” is used to refer to all types of
administrators in Quebec.
REMINDER: Terminology varies significantly between provinces, and even more so within
Quebec. For ease of reading, as terminology is defined one word or phrase is selected for
purposes of the materials in this course. Jurisdiction-specific terminology is only used if
required. See the Generic Terms Cheat Sheet for the full list of generic terminology.
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1.1 INTRODUCTION
A fiduciary is one who is responsible for managing property or making decisions for the benefit
of others or on behalf of another. There are many examples where someone may have fiduciary
duties to others. These include the directors appointed by shareholders of a company to oversee
the management of the company or investment managers entrusted to manage an investor’s
assets in accordance with an investment policy.
The Certificate in Estate and Trust Administration, and this course in particular, is concerned
with three very specific types of fiduciaries. They are:
trustees: those appointed to manage a trust for the benefit of others;
personal representatives (executors and administrators; liquidator in Quebec): those
responsible for administering the estate of a deceased person and distributing the estate
to the beneficiaries; and
substitute decision-makers: those appointed to make financial decisions on behalf of
another person when that person is not capable of making his or her own decisions.
This course introduces students to the laws that govern fiduciaries in these three situations. In
each case one or more persons, a corporate trustee, or a public official is appointed to carry out a
number of responsibilities. As fiduciaries they are required to comply with the terms of the
document that appoints them to the role and carry out their duties honestly and prudently. Each
role is reviewed in more detail in the next chapter.
See Figure 1.1 Types of Fiduciaries, Responsibilities, and How Appointed for a list of fiduciaries
discussed in this course, the nature of their role and responsibilities, and the method by which
they are appointed. Unless otherwise stated, all further references to fiduciaries in this course are
limited to one or more of these three roles.
This Chapter also introduces the student to the legal systems that govern this area of the law in
Canada. It explains why the laws of other jurisdictions may be relevant and it introduces students
to the legal professionals who may both assist clients when appointing fiduciaries and assist
fiduciaries when carrying out their duties and responsibilities.
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Personal Representative To administer the estate of a deceased person See Executor and Administrator
Quebec: Liquidator and distribute assets to beneficiaries of estate
Executor To administer the estate of a deceased person Common Law: Deceased person’s will (Grant of Probate)
Quebec: Liquidator in accordance with the deceased’s will Quebec: Appointed by heirs or the court
Administrator To administer the estate of a deceased person Common Law: Court order (Grant of Administration)
Quebec: Liquidator and distribute assets to beneficiaries according Quebec: Appointed by heirs or the court
to the law when there is no will or there is no
executor
Administration of trusts
Trustee To manage assets for others and distribute in Appointed in a will, a trust deed
accordance with instructions in the trust Common Law: May also be appointed by court or in a
document declaration of trust.
Quebec: May also be appointed by court.
a
See Figure 2.5 Substitute Decision-makers by Jurisdiction for the terminology for each type of substitute decision-maker by jurisdiction.
b
A power of attorney can also be used when the donor is capable. Note: in most common law jurisdictions, the attorney can also make
decisions while the donor is capable if that is what the donor wants. See Chapter 11 at 11.2 Enduring Power of Attorney.
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Introduction to the Law of Estates and Trusts
1.2.2 Legislation
From time to time, even a well prepared document may fail to deal with some aspect of the
administration. Sometimes the instructions in a document are incomplete or the document is
silent on certain matters. Legislation fills in these gaps and also includes powers that may be
required to ensure the fiduciary has the authority required to carry out the responsibilities.
Legislation also provides default rules for appointing or replacing a fiduciary, and governs when
and how the courts may become involved. Although relatively rare, legislation may also set out
rules that override instructions or powers in the document.
Tax legislation sets out the tax rules for individuals when living and on death and also includes
rules for taxing the income earned by a trust and distributed to a beneficiary.
1
In British Columbia, a Notary Public is also permitted to prepare a will, power of attorney, or representation
agreement. They cannot draft trust documents.
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2
The income tax rules (Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.)) that govern estate and trust administration are
introduced later in this course (see Chapter 8 Personal Tax Returns Due on Death). The details are reviewed in the
the third course in the Certificate program, Estate and Trust Taxation course (CETA 3). Hereafter referred to as
CETA 3.
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Figure 1.2: Canada’s Court System – How the Courts Are Organized
For a list of the courts, by jurisdiction, see Figure 1.4 Courts in Canada By Jurisdiction at the end
of this chapter.
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Introduction to the Law of Estates and Trusts
jurisprudence. This system of law is known as the common law. The common law is a system of
law that was developed in England and has been adopted by the British Commonwealth
countries.
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Introduction to the Law of Estates and Trusts
3
The nature of the Quebec trust will be examined further in Chapter 2, see 2.2.2 Quebec Only: What Is a Trust?
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Introduction to the Law of Estates and Trusts
4
The law governing conflicts of law are also referred to as Public International Law (PIL). As families become
more and more mobile, within Canada and around the world, these “conflict” issues arise more and more often,
both when a client is incapable, and on death. The PIL rules are complex. The information in this course offers an
introduction in order to help identify potential administration issues. Legal and tax advice will often be required.
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Introduction to the Law of Estates and Trusts
person gives up his or her domicile of choice, the domicile reverts to the domicile
of origin until or unless there is a new domicile of choice.
3. Domicile of dependency is conferred by operation of law upon those persons
who, by reason of legal or mental disability, are unable to acquire a domicile of
choice, including minors and certain mentally incapable persons. In some
jurisdictions outside Canada domicile of birth or dependency may be determined
by the domicile of the father, or that of the mother if born outside marriage.
The laws governing domicile are subject to legislation. For example:
Manitoba: The Domicile and Habitual Residence Act has replaced the common
law rules respecting domicile, including the rule that the domicile of origin is
revived upon the abandonment of a domicile of choice (section 3). The legislation
sets out the rules for determining domicile and habitual residence.
A person can only have one domicile at a time. Domicile is not the same as nationality.
However, nationality may be relevant in determining one’s domicile.
Domicile and residence are also not the same (see 1.7.1.2 Common Law Only:
Residence). However, for many, the place of residence will be the place of one’s
domicile unless the person has an intention to leave his or her place or residence in the
future and return to live permanently in another jurisdiction.
Example: Geoffrey moves to another country (Country B) to work and stay for many
years (or even decades). However, if Geoffrey intends to return to where he was born
(Country A) when he retires, Geoffrey’s domicile remains the domicile of origin or
the place where he was born (Country A).
The common law has developed additional rules to assist with determining one’s domicile.
The rules are beyond the scope of this course.
5
CETA 3 addresses the issues of domicile and residency in more detail.
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social ties (including memberships), economic ties such as bank accounts, driver’s
licence, passport, and health insurance are located.6
Factors often include where one has a closest connection. For example,
Canadian law looks at significant residential ties, such as the location of one’s
home, as well as where personal property, social ties (including memberships),
economic ties such as bank accounts, driver’s licence, passport, and health
insurance are located.7
The residence of a person is the place where he or she ordinarily resides and if
there is more than one residence, then the principal residence is considered in
establishing the person’s domicile (art. 77).
In addition to these basic definitions, these rules must be considered too.
If domicile cannot be determined, the person’s domicile is deemed to be the
place of his or her residence. If he or she has no residence, it is the place where
he or she lives and if that is unknown, it is the place of his or her last domicile.
(art. 78).
An unemancipated minor is domiciled with his or her tutor (generally a parent)
and if the parents do not live together, with the parent with whom the minor
usually resides or as fixed by the court (art. 80).
An incapable adult under tutorship or curatorship is domiciled with his or her
tutor or curator as applicable (art. 81).
The CCQ also recognizes that spouses may have different domiciles (art. 82) and it is
possible to elect in writing one’s domicile for certain acts (art. 83).
6
See “Determining Your Residency Status” on Canada Revenue Agency Website, accessed June 22, 2018, at
http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/rsdncy-eng.html.
7
See “Determining Your Residency Status” on Canada Revenue Agency Website, accessed June 22, 2018, at
http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/rsdncy-eng.html.
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8
Notaries Act, R.S.B.C. 1996, c. 334, s. 18.
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See “Review Questions” for this chapter in the Student Resources online.
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Jurisdiction Courts
Canada Supreme Court of Canada
Supreme Court of Canada - Applications for Leave
Federal Court of Appeal
Federal Court of Canada
Tax Court of Canada
British Columbia Court of Appeal
Supreme Court of British Columbia
Provincial Court of British Columbia
Alberta Court of Appeal
Court of Queen's Bench
Provincial Court
Saskatchewan Court of Appeal for Saskatchewan
Court of Queen's Bench for Saskatchewan
Provincial Court of Saskatchewan
Manitoba Court of Appeal
Court of Queen's Bench of Manitoba
Provincial Court of Manitoba
Ontario Court of Appeal for Ontario
Superior Court of Justice
Divisional Court
Ontario Court of Justice
Quebec Court of Appeal
Superior Court
Court of Quebec
New Brunswick Court of Appeal of New Brunswick
Court of Queen's Bench of New Brunswick
Provincial Court
Nova Scotia Nova Scotia Court of Appeal
Supreme Court of Nova Scotia
Supreme Court of Nova Scotia (Family Division)
Provincial Court of Nova Scotia
Nova Scotia Probate Court
Nova Scotia Family Court
Prince Edward Island Prince Edward Island Court of Appeal
Supreme Court of Prince Edward Island
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Source: CanLII database https://www.canlii.org/en/ca/ accessed June 22, 2018. See website for a full listing for
each jurisdiction, including small claims courts, youth courts, and tribunals.
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Newfoundland and Labrador Supreme Court of Newfoundland and Labrador, Court of Appeal
Supreme Court of Newfoundland and Labrador, Trial Division
Provincial Court of Newfoundland and Labrador
Court of Appeal
Yukon Supreme Court of Yukon
Territorial Court of Yukon
Northwest Territories Court of Appeal for the Northwest Territories
Supreme Court of the Northwest Territories
Territorial Court of the Northwest Territories
Nunavut Court of Appeal of Nunavut
Nunavut Court of Justice
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