Managing a testamentary trust under the New Brunswick Trustees Act requires acting in the absolute best interests of the beneficiaries. You must prudently invest the trust funds, file annual T3 trust tax returns with the Canada Revenue Agency (CRA), and distribute assets exactly as the Will dictates.
Being named as a trustee in a Will is a significant sign of trust and respect. 💕 However, managing a testamentary trust (a trust created after someone passes away) in New Brunswick is not merely an honorary title; it comes with strict legal and financial obligations. If you mismanage the funds or ignore provincial laws, you could be held personally liable for the financial losses suffered by the beneficiaries.
Whether the trust was set up in Moncton to support a minor child, or in Fredericton to care for a disabled dependent, the rules remain the same. 📍 This guide explains the core responsibilities of a trustee in New Brunswick and how to protect yourself legally while fulfilling the deceased person’s wishes.
Step-by-Step Process for Managing a Trust in New Brunswick
A trustee’s role begins as soon as the executor finishes probating the Will and transfers the designated assets into the trust. From that moment forward, your primary job is to protect and grow those assets until they are ready to be paid out.
Step 1: Understand the Trust Document
Your very first duty is to read and completely understand the Last Will and Testament that created the trust. 📖 The Will is your ultimate rulebook. It will tell you exactly what you can and cannot do with the money, when to pay out income, and at what age the beneficiaries are entitled to the final lump sum.
Step 2: Invest the Assets Prudently
Under the New Brunswick Trustees Act, you cannot simply leave large sums of trust money sitting in a zero-interest chequing account. 📈 You have a legal duty to invest the funds prudently, acting as a careful person would with their own money. It is highly recommended to hire a licensed financial advisor to create a balanced, low-risk investment portfolio for the trust.
Step 3: Keep Meticulous Accounting Records
Transparency is a strict legal requirement. 💱 You must keep a flawless record of every single penny that enters and leaves the trust account. Beneficiaries have the legal right to request a formal “passing of accounts” at the Probate Court, where a judge will review your ledgers to ensure no money was misused or misappropriated.
Step 4: File Annual T3 Tax Returns
A trust is considered a separate taxpayer in Canada. 🏨 As the trustee, you must obtain a Trust Account Number from the CRA and file a T3 Trust Income Tax and Information Return every single year. Failure to file these returns can result in severe penalties from the federal government, which you may have to pay out of your own pocket.
How Much Does Trust Administration Cost in NB?
Managing a trust involves ongoing professional expenses, which are legally allowed to be paid directly from the trust funds. 💵 Here are the typical costs:
| Professional Service | Estimated Cost (CAD) |
|---|---|
| Accountant Fees (Annual T3 Tax Return) | $750 – $2,000+ per year |
| Lawyer Fees (Legal Advice / Passing Accounts) | $250 – $450 per hour |
| Financial Advisor Fees | 1% – 2% of assets under management |
| Trustee Compensation (If claimed) | Up to 5% of the trust value |
How Long Does the Process Take?
The lifespan of a testamentary trust depends entirely on the instructions in the Will. 🕑 Some trusts are designed to last only a few years, such as waiting for a 16-year-old beneficiary to turn 19. Other trusts, such as a Henson Trust for a disabled dependent, may be designed to last for the entire lifetime of the beneficiary. Tax filings and accounting must occur annually for the trust’s entire existence.
Frequently Asked Questions (FAQ)
Can I be paid for being a trustee?
Yes. Under New Brunswick law, unless the Will states otherwise, a trustee is entitled to “fair and reasonable” compensation. This is typically calculated as a percentage of the capital and income managed, often capping around 5%, subject to approval by the beneficiaries or the Probate Court.
Can I resign if it is too much work?
You cannot simply abandon your post. If the Will names an alternate trustee, you can officially step down and transfer the duties to them. If no alternate is named, you must formally apply to the Court of King’s Bench to be discharged from your duties.
Can the beneficiaries sue me?
Yes. If you breach your fiduciary duty-by making reckless investments, stealing funds, or failing to pay taxes-the beneficiaries can sue you personally to recover the lost money. This is why keeping perfect records and hiring professionals is crucial.
Do I have to do all the work myself?
No. Trustees are encouraged to delegate highly technical tasks. You can, and should, hire accountants for tax returns, lawyers for legal advice, and investment managers for the portfolio. The fees for these professionals are paid out of the trust assets.
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