Trust and Settlement Variation Act

On Saturday, I wrote here that in British Columbia if all of the beneficiaries of a trust were known, adults and of full capacity, they could all agree terminate the trust and require the trustee of a trust to transfer the trust assets to the beneficiaries. This is referred to as the rule in Saunders v. Vautier. On the other hand, if any beneficiary is unborn, a minor or for some other reason does not have the legal capacity to consent, the beneficiaries cannot terminate the trust persuant to the rule in Saunders v. Vautier.

However,the Trust and Settlement Variation Act, RSBC 1996, c. 463, provides that the Supreme Court of British Columbia may approve any arrangement “varying or revoking all or any of the trusts or enlarging the powers of the trustees of managing or administering any of the property subject to the trusts” on behalf of unborn, minor or incapacitated beneficiaries.

Accordingly, it is possible to terminate or vary a trust with minor, unborn, or other incapacitated beneficiaries, but it is necessary to apply to court for approval.

Section 2 of the Trust and Settlement Variation Act provides that the court may only approve an arrangement varying or revoking a trust if the arrangement appears to be for the benefit of those on behalf of whom the court is asked to approve the arrangement.