Many people assume that when a beneficiary's inheritance is placed in trust, the trustee's job is simply to preserve the money until the beneficiary reaches a certain age.

That is not always the case.

A trustee's responsibility is not only to protect trust assets but also to carry out the purpose of the trust. When a trust is created to support a child, the trustee must carefully consider whether withholding funds is consistent with the testator's intentions.

The Alberta Court of Queen's Bench decision in Gall Estate v. Turpin, 2022 ABQB 25 provides important guidance on trust administration, child support claims against estates, trustee discretion, and the treatment of life insurance proceeds intended to benefit a child.

The Background

The deceased's will established a testamentary trust for her minor son.

The trust provided that the child's inheritance would be held until he reached the age of 25. In the meantime, the trustee was authorized to use trust funds for the child's maintenance, education, advancement, and benefit.

Following the deceased's death, significant disputes arose regarding:

• Child support obligations;
• Administration of the trust;
• Access to trust funds;
• Trustee decision-making; and
• Life insurance proceeds intended for the child.

The child's father argued that the trust was not being administered in a manner consistent with the deceased's intentions.

A Trust Is Not Just a Savings Account

One of the most important lessons from the case is that trustees must understand the purpose of the trust they are administering.

Some trustees focus almost exclusively on preserving capital.

While protecting trust assets is important, preservation cannot become the sole objective if doing so prevents the trust from fulfilling its intended purpose.

Where a trust expressly authorizes payments for a child's benefit, the trustee must genuinely consider whether expenditures should be made.

The role requires judgment, not automatic refusal.

Trustee Discretion Must Be Exercised Properly

Trustees are often given broad discretionary powers.

However, discretion does not mean unlimited authority.

A trustee must:

• Consider relevant information;
• Act honestly and in good faith;
• Follow the terms of the trust;
• Consider the beneficiary's circumstances; and
• Exercise independent judgment.

A trustee cannot simply adopt a blanket policy of denying requests.

Courts expect trustees to actively consider whether distributions advance the objectives of the trust.

Being Overly Restrictive Can Create Problems

The court found that the trustee had taken an excessively restrictive approach to requests for trust funds.

Although the trust expressly permitted expenditures for the child's maintenance and benefit, requests were repeatedly refused.

This raised concerns that the trustee's administration was inconsistent with the purpose of the trust.

The case demonstrates that trustees may encounter legal difficulties not only when they spend too much money but also when they refuse to spend money that the trust was intended to provide.

Removal Is Not Always the Solution

Beneficiaries often assume that dissatisfaction with a trustee automatically justifies removal.

Courts generally take a more cautious approach.

In Gall Estate, the court declined to remove the trustee.

Importantly, there was insufficient evidence to establish bad faith, dishonesty, or malicious conduct.

While the court disagreed with aspects of the trustee's decision-making, it concluded that removal was not necessary.

This highlights an important principle:

Not every administration problem justifies replacing a trustee.

Courts often prefer less intrusive remedies where appropriate.

Courts Can Order Ongoing Accountability

Although the trustee remained in place, the court imposed additional oversight.

Periodic accounting requirements were ordered to ensure transparency and proper administration going forward.

Trustees should remember that court supervision exists on a spectrum.

Possible remedies include:

• Requests for information;
• Formal accountings;
• Directions from the court;
• Conditions on administration; or
• Removal in more serious cases.

Court involvement can increase long before removal becomes necessary.

Child Support Obligations May Survive Death

Another significant issue involved support obligations.

The court concluded that the deceased's support obligations did not simply disappear at death.

While later events altered the child's legal circumstances, the estate remained responsible for support obligations that existed during the relevant period following death.

This is an important reminder that estates may remain responsible for certain family law obligations that arose before death.

Estate trustees must be aware of these potential claims when administering estates involving dependent children.

Estate Planning and Trust Planning Must Work Together

The decision also highlights how estate planning tools often interact.

The deceased had created:

• A testamentary trust;
• Life insurance arrangements; and
• Estate provisions intended to benefit her child.

These structures all needed to be interpreted together.

When trustees focus too narrowly on one document or one source of funds, they may lose sight of the broader estate planning objective.

Courts frequently examine the plan rather than any single asset in isolation.

Life Insurance Proceeds Require Careful Administration

The court also considered life insurance proceeds intended to benefit the child.

Concerns arose because the funds were effectively being treated as though they were unavailable until the child reached age 25.

The court determined that this approach did not necessarily align with the purpose for which the insurance proceeds had been established.

Where life insurance is intended to support a child, trustees and estate administrators should carefully consider whether the funds are being managed in a manner consistent with that objective.

Communication Matters

Many trust disputes arise because beneficiaries or parents receive little explanation regarding trustee decisions.

A trustee who refuses a request without providing meaningful reasons often creates frustration and suspicion.

Good administration frequently involves:

• Sharing information;
• Explaining decisions;
• Providing financial updates; and
• Demonstrating that requests have been fairly considered.

Transparency can often prevent litigation from developing.

Practical Lessons for Trustees

Understand the Purpose of the Trust

Trusts should be administered according to their intended objectives.

Exercise Discretion Thoughtfully

Every request should receive genuine consideration.

Keep Detailed Records

Trustees should document the reasons for significant decisions.

Communicate Clearly

Beneficiaries and interested parties should understand why decisions are being made.

Do Not Assume Preservation Is Always the Goal

Sometimes a trust exists to provide current support, not simply future inheritance.

The Bottom Line

Gall Estate v. Turpin, 2022 ABQB 25 is an important reminder that trustees must do more than preserve assets. They must administer trusts in a manner consistent with the purposes for which they were created. An overly restrictive approach can undermine those objectives and lead to court intervention, accounting obligations, and judicial oversight.

The decision demonstrates that courts expect trustees to balance protection of trust property with the practical needs of beneficiaries, particularly where a trust was established to support a child.

How MerGen Law Can Help

At MerGen Law, we assist clients throughout Alberta with trust administration, trustee disputes, estate litigation, child support claims against estates, beneficiary rights, passing of accounts applications, fiduciary duty issues, and estate planning disputes. Whether you are acting as a trustee or have concerns about how a trust is being administered, our team can help protect your interests.

This article is intended for informational purposes only and does not constitute legal advice. Individuals facing concerns about elder abuse should seek professional advice tailored to their specific circumstances.