What is a testamentary trust – or a trust made by a Last Will – in Quebec?
A testamentary trust is a legal arrangement created through a will, whereby a deceased person transfers property to a trust patrimony that is administered separately from the estate for the benefit of designated beneficiaries. It only comes into existence upon death and must be clearly expressed in the Will, including the intention to create a trust, the property forming the trust, and the identification of trustees and beneficiaries. Once constituted, the trust becomes an autonomous patrimony, distinct from both the deceased’s estate and the personal assets of the trustees or beneficiaries.
The creation mechanism relies on the Will setting out sufficient elements to establish the trust without ambiguity. The testator must designate one or more trustees and describe their powers, as well as identify the beneficiaries or the purpose of the trust. The transfer of property into the trust occurs at death, and the liquidator of the succession is generally responsible for delivering the property to the trustees. From that moment, the trustees hold and administer the property not in their personal capacity, but as fiduciaries for the trust.
Trustees have significant responsibilities and must act with prudence, diligence, honesty, and loyalty in the best interests of the beneficiaries. Their role includes managing, investing, and preserving the trust property, complying with the terms of the Will, and ensuring that distributions are made in accordance with the trust’s purpose. Trustees must avoid conflicts of interest, keep proper accounts, and be able to justify their administration. They are also expected to act impartially when multiple beneficiaries are involved, balancing competing interests where necessary.
In Quebec, a testamentary trust is generally subject to limits on its duration. While it may last for a significant period, it cannot exist indefinitely and is typically structured to terminate upon the occurrence of a specified event, such as the death of a beneficiary or the attainment of a certain age. The trust must respect the broader rule that property cannot be tied up perpetually without eventual transmission. As such, the Will often provides mechanisms or timelines to ensure that the trust will come to an end within a legally acceptable timeframe.
Wrapping up a testamentary trust involves the final distribution of the trust property to the beneficiaries in accordance with the terms set out in the Will. Once the triggering event for termination occurs, the trustees must settle the trust’s affairs, pay any outstanding debts or expenses, and prepare a final accounting. After rendering accounts and obtaining any necessary approvals or releases from the beneficiaries, the trustees transfer the remaining assets and formally bring the trust to an end. Their role then ceases, subject to any residual obligations related to their administration.
This text is provided for legal information purposes only. If you have a specific question regarding your personal situation, please contact a lawyer.
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