New Public Trustee Act and new Minors Property Act
1 Introduction
2 Public Trustee Overview
2.1 History
2.2 Structure of the office
2.3 Functions of the Public Trustee
2.4 Investment
2.5 Fees and charges
3 Public Trustee and Vulnerable Adults
4 Public Trustee and Deceased Persons’ Estates
4.1 Public Trustee as personal representative
4.1.1 Public Trustee as executor
4.1.2 Interim administration
4.1.3 Administration of very small estates
4.1.4 Priority to a grant in certain cases
4.1.5 Administration where no one else has obtained a
grant
4.1.6 Election to administer estate
4.1.7 Other circumstances
4.2 Notice to Public Trustee of application for grant
4.2.1 Where vulnerable person interested in estate
4.2.2 Dependants’ Relief
4.3 Other applications relating to administration
of a deceased’s estate
4.3.1 Public Trustee is trustee for dependent adult
4.3.2 Minor interested in estate
4.3.3 Missing person interested in estate
5 Public Trustee and Minors’ Financial Interests
5.1 Matters not covered by the Minors’ Property
Act
5.1.1 Expenditures for minors’ benefit
5.1.2 Dispositions of real property where minor interested
in an estate
5.1.3 Monitoring trustees
5.1.4 Public Trustee as guardian ad litem
5.2 Matters covered by the Minors’ Property
Act
5.2.1 Procedure on applications under the Act
5.2.2 Dispositions of minor’s property – section
2
5.2.3 Confirmation of minor’s contract – section
3
5.2.4 Settlement of minor’s legal claim – section
4
5.2.5 Discharge of obligations to minors – sections
5-9
5.2.6 Appointment of trustee of minor’s property – sections
10 -12
5.2.7 Order requiring delivery to Public Trustee – section
13
6 Public Trustee and Missing Persons
On January 1, 2005 two new acts (albeit with familiar names) came into force
in Alberta: the Public Trustee Act (“PTA”)1 and
the Minors’ Property Act (“MPA”).2 Both
acts arose out of a review of the former PTA, which had not been comprehensively
reviewed since originally enacted in 1949.3 During
the review it became apparent that there were relationships between the PTA
and MPA that made it appropriate to make changes to the latter act as well.
This paper is concerned with the Public Trustee’s role in protecting
the financial interests of vulnerable Albertans and in the administration of
deceased estates. The primary focus is on areas where the new legislation makes
significant changes either in the scope of Public Trustee functions or in how
it carries them out.
The paper has the following main divisions:
- Public Trustee Overview
- Protecting Vulnerable Adults
- Public Trustee and Deceased Persons’ Estates
- Public Trustee and Minors’ Financial Interests
- Public Trustee and Missing Persons
These divisions reflect the rough breakdown between the Public Trustee’s
major functional areas.
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The office of the Public Trustee was created in 1949. It combined the functions
of the Official Guardian, the Administrator of the Estates of the Mentally
Incompetent, and the Public Administrators appointed under the Judicature
Act.4
The inspiration for Alberta’s original Public Trustee legislation appears
to have come from New Zealand, which enacted legislation creating the office
of public trustee in 1872. 5 Regardless of whether
Alberta’s was consciously modeled on the New Zealand legislation, there
is certainly a strong family resemblance between many provisions of the original
Alberta legislation and the contemporary New Zealand legislation. And many
provisions of the new PTA also have close analogues in the current New Zealand
legislation: the Public Trust Act 2001.
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The office of the Public Trustee is a corporation sole.6 The
former PTA required that the individual appointed to hold the office be a barrister
and solicitor of ten years’ standing.7 This
requirement has not been carried forward in the new PTA. Henceforth, any capable
individual may be appointed to hold the office of Public Trustee. The Public
Trustee – that is, the officeholder – may delegate any of the Public
Trustee’s powers, duties or functions to any employee or class of employee
in the office of the Public Trustee.8
Although the Public Trustee, as a corporation sole, has its own legal personality,
in organizational terms the Public Trustee is part of the Department of Justice
and Attorney General. For example, the Public Trustee, as such, is not an employer.
Employees who work in the office of the Public Trustee are employees of the
Crown assigned to work in the office of the Public Trustee. The relationship
between the Public Trustee and the Crown is further illustrated by PTA section
42(1). It provides that no action lies against the Crown for an act or omission
of the Public Trustee, but that if a judgment is obtained against the Public
Trustee, the judgment is deemed to be against the Crown in right of Alberta.
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Former PTA section 4 contained ten clauses, with numerous sub-clauses, describing
the powers of the Public Trustee. Many of these clauses and sub-clauses overlapped
each other and specific provisions elsewhere in the former PTA or in other
legislation. New PTA section 5 serves a similar purpose to the former section,
but is more concise and has less overlap. PTA’s five clauses and sub-clauses
describe capacities in which the Public Trustee may act:
- as personal representative of a deceased person;
- as trustee of any trust or to hold or administer property in any other
fiduciary capacity;
- to protect the property or estate of minors and unborn persons;
- in any capacity in which the Public Trustee is authorized to act
- by an order of the Court of Queen’s Bench
- under the PTA or any Act.
PTA section 4 is permissive. It says that the Public Trustee may perform
the functions that it describes. The distinction between power to act and duty
to act is emphasized by PTA section 6(1), which says that the Public Trustee
is under no duty to perform a function or accept an appointment by reason only
of being empowered or authorized to do so.
PTA section 5 authorizes the Public Trustee to act in any capacity in which
it is authorized to act by an order of the Court. PTA sections 6(2) and 6(3)
distinguish between two situations in which the Court might consider appointing
the Public Trustee to act in a capacity or perform a function.9
The first situation is where an act expressly authorizes the Court to direct
the Public Trustee to perform a particular function. Here PTA section 6(2)
says that the Public Trustee must be given a reasonable opportunity to make
representations regarding the proposed direction. However, if an act expressly
authorizes the Court to direct the Public Trustee to perform a particular function
the Public Trustee’s consent is not required.
The second situation, covered by PTA section 6(3), is where no act expressly
authorizes the Court to direct the Public Trustee to perform a particular function.
In this case the Court may appoint the Public Trustee to perform the function
only with the Public Trustee’s consent.
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As of March 31, 2004 the Public Trustee administered financial assets with
a total book value of about $454 million, broken down approximately as follows:10
Common Fund |
$367 million |
Special Reserve Fund |
$50 million |
Client Securities |
$37 million |
The category, client securities, includes term deposits, bonds,
shares and other securities held by the Public Trustee as separate investments
for particular clients. The value of client securities is approximately 10%
of the value of the common fund. This ratio gives an indication of the common
fund’s longstanding position as the principal vehicle for investing client’s
funds.
The common fund goes back even further than the office of the Public Trustee.
It was originally authorized by a 1934 amendment to the Trustee Act that
allowed the Official Guardian and the Administrator of the Estates of the Mentally
Incompetent to place client funds in a pooled investment fund.11 The
common fund’s detailed mechanics were originally defined in 193712 and
remained essentially unchanged until the enactment of the new PTA in 2004.
As discussed below, the new PTA changes the mechanics but preserves the basic
contours of the common fund.
Alberta’s original common fund legislation seems to have been modeled
on the New Zealand legislation. The following observations were made regarding
the New Zealand common fund, but similar observations could be made regarding
Alberta’s common fund:
The common fund is simply a means by which capital … is pooled for
investment purposes … This mechanism offers a number of advantages to
contributors: the fact that money is pooled means that a greater range of investment
opportunities are available; small sums enjoy the same privileges as large
sums; interest payments run from the moment that money is deposited and do
not cease for periods between investments; advances can be made to estates
to the extent of the assets of the estate; and funds are immediately available
for the maintenance of minors or early distribution on the death of a life
tenant.13
Following the New Zealand model, Alberta adopted what might be referred to
as a regulated-rate approach for the common fund. This may be contrasted
with the actual-return approach, which is a familiar characteristic
of mutual funds (and trust corporations’ common funds).
In a mutual fund or other pooled fund that takes the actual-returns approach,
fund participants have all the advantages and disadvantages of being the owners
of the fund’s underlying assets. Their returns (positive or negative)
move in lock step with the actual returns on the fund’s investments (after
adjustments for management expenses and the like). But that was not the approach
adopted for the Public Trustee’s common fund.14
Rather than rising and falling in lock step with the value of the common
fund’s underlying investments, the value of clients’ claims against
the fund has been determined in essentially the same manner as you would determine
the balance outstanding on an interest-bearing bank account. Clients have always
received a prescribed rate of interest on their common fund
balances.15 The balance outstanding on a client’s
common fund account at a particular time was simply the aggregate of all amounts
deposited and all interest credited to their account, less the aggregate of
all amounts drawn or paid from the account.16
The former PTA created a special reserve fund (“SRF”)
to provide a buffer against fluctuations in the common fund’s income
and in the value of its investments.17 If the income
earned by the common fund’s investments for a period exceeded the interest
payable to clients at the prescribed rate for the period, the surplus was transferred
to the SRF.18 Conversely, if the interest payable
to clients at the prescribed rate exceeded the common fund’s income for
the period, the deficiency would be met by transfers from the SRF.19
The SRF also served the closely related purpose of providing a buffer against
appreciation or depreciation in the value of common fund investments. Gains
realized on the disposition of a common fund security were to be paid into
the SRF, and losses realized on disposition of common fund securities were
to be made up by transfers from the SRF.20
The SRF formed the first line of defence against the possibility that common
fund assets might not be sufficient to meet clients’ collective claims
against the common fund. The credit of the Province of Alberta provided the
ultimate bulwark against any insufficiency in the common fund’s assets.
The government guaranteed that the assets of the common fund and SRF would
be sufficient to meet all lawful claims payable out of the common fund.21
The former PTA provided that the common fund and SRF could be invested in
the “legal list” of authorized trustee investments, which is set
out as schedule to the Trustee Act.22 In
fact, although the legal list does allow for some investment in preferred and
common shares, both funds have always been invested exclusively in high-grade
debt instruments, such as government, municipal and investment-grade corporate
bonds. Moreover, the Public Trustee has always followed a policy of holding
bonds until maturity, which greatly limits the potential for realized capital
losses (or gains).
As mentioned earlier, the new PTA changes the mechanics but preserves the
fundamental characteristics of the common fund. The following points summarize
both the main changes and the fundamental similarities:
- The SRF has been merged with the common fund.23 However,
reserves will be maintained within the common fund and will serve much the
same purposes as were served by the SRF.24
- The new PTA adopts and formalizes the former Act’s “bank-account” approach
to calculating the value of clients’ claims against the common fund.
Each client whose money is paid into the common fund has a guaranteed
account. The balance outstanding on a guaranteed account is calculated
in the same manner that the value of a client’s claim against the common
fund was calculated under the former PTA.25
- Clients have a charge against the assets of the common fund for the amount
outstanding on their guaranteed account, and payment is unconditionally guaranteed
by the Crown.26
- The former PTA provided for the creation of more than one common fund.
The new PTA only provides for one common fund but contemplates that regulations
may create different categories of guaranteed account.27
- Under the former PTA, common fund participants received interest at a
prescribed rate. Under the new PTA clients will receive interest at a rate
set by the Public Trustee in accordance with the regulations.28 Currently
the regulations state that the Public Trustee must have regard to the current
average yield on the common fund’s investments and to any other matter
that the Public Trustee considers relevant.29
- While the former PTA restricted the Public Trustee to investing the common
fund in legal-list investments, the new PTA requires the Public Trustee,
subject to the regulations, to “invest the common fund in accordance
with investment policies, standards and procedures that a reasonable and
prudent person would apply in respect of a portfolio of investments to avoid
undue risk of loss and obtain a reasonable return.”30 The
Public Trustee’s view of what is prudent will undoubtedly be influenced
by the facts (1) that the Act contemplates that clients will always receive
a positive return (i.e. interest) on their guaranteed accounts and (2) that
the government guarantees the amount outstanding on clients’ guaranteed
accounts.
- The former PTA provided for a prescribed common fund management fee.31 The
new PTA authorizes the Public Trustee, in accordance with the regulations,
to transfer amounts from the common fund to the General Revenue Fund to be
applied to the cost of administering the Act.32 At
the time of writing the prescribed transfer rate is 0.175% per annum,33 the
same as the management fee that was prescribed under the former Act.
As mentioned earlier, as of March 31, 2004 the value of common fund assets
(not including the SRF) exceeded the value of financial assets held outside
of the common fund for individual clients by a ratio of about 10 to 1. This
indicates that although the former PTA provided that clients funds “may” be
invested in a common fund, the common fund was regarded as the principal vehicle
for investing client funds. The new PTA formalizes this presumption in favour
of placing client funds in the common fund. The Public Trustee may invest a
client’s funds separately only if required to do so by the trust instrument,
court order or other authority under which the Public Trustee holds the funds
or if permitted to do so by the regulations.34 At
the time of writing the regulations do not contain any provisions that would
permit the Public Trustee to make separate investments for clients, so the
Public Trustee may make separate investments only when required to do so by
a trust instrument or court order.
PTA section 38 allows the Public Trustee to establish one or more pooled
investment funds if authorized to do so by regulation. In contrast to
the common fund’s regulated-rate structure, pooled investment funds
would be similar to mutual funds or trust corporation common funds, in that
they would be actual-return funds. Money invested in pooled investment funds
would not be guaranteed by the Crown. At the time of writing no
pooled investment funds have been authorized by regulation.
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PTA section 40(1)(a) authorizes the Public Trustee to charge a client35a
fee that the Public Trustee considers reasonable for any service, including
legal services, that the Public Trustee provides to the client. Fees and expenses
may be collected before or after providing a service or periodically while
providing services under an ongoing relationship with a client.36
The Public Trustee’s standard fees for various services are set out
in fee schedules.37 However, the Court may review
any fee charged by the Public Trustee to a client under section 40.38
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A substantial proportion of Public Trustee resources is devoted to functions
relating to the Dependent Adults Act (“DAA”). However,
this paper deals with these functions quite briefly, because the new legislation
has made few changes to the Public Trustee’s role in this area.
The Court may appoint the Public Trustee as trustee for a dependent adult.39 The
Public Trustee is under a duty to apply to be appointed as trustee of the estate
of an adult person if all of the following conditions are met:40
- the Public Trustee is of the opinion that the estate of a person is in
need of a trustee;
- no person is willing, able and suitable to make an application for an
order appointing a trustee;
- no person is willing, able and suitable to be appointed as the trustee
of the person's estate.
If the first and third of the above conditions are satisfied but there is
a person who is willing, able and suitable to make an application, the Public
Trustee could simply consent to being appointed as trustee on an application
by that person.41
Even if the person making the application does not propose that the Public
Trustee be appointed as trustee, DAA section 48 allows the Court to appoint
the Public Trustee as trustee if the Court is not satisfied that the person
proposed as trustee meets the requirements of the Act. DAA section 48 makes
it clear that the Public Trustee’s consent is not required to such an
appointment. However, PTA section 6 requires that the Public Trustee be given
a reasonable opportunity to make representations regarding the proposed appointment.
Part 4 of the DAA provides for certificates of incapacity to be
issued regarding adults who are a resident of a facility designated by regulation.42 A
certificate of incapacity may be issued by two physicians who have separately
examined the adult and have formed the opinion that the adult is unable to
make reasonable judgments regarding their estate.43 The
Public Trustee automatically becomes the adult’s trustee when a certificate
of incapacity is issued, unless the adult has made an enduring power of attorney.44
If a certificate of incapacity has been issued, the Public Trustee will administer
the incapacitated person’s property in much the same way as it would
be administered if the Public Trustee had been appointed trustee by a court
order. However, the mechanisms for reviewing the certificate of incapacity
are mainly extra-judicial. The Public Trustee must apply to an appeal panel
for a review of the certificate at least once every two years.45 Moreover,
just as two physicians may issue a certificate of incapacity, two physicians
who have separately examined the incapacitated person may terminate the certificate
if they are satisfied that the person is able to make reasonable judgments
regarding their estate.46
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The Public Trustee may act as executor of a deceased person’s will.47 The
Public Trustee is not required to act as executor if appointed by a testator.48 Nevertheless,
the Public Trustee will only decline to act if there is some specific circumstance
that, in the Public Trustee’s view, makes it either inappropriate for
the Public Trustee to act or more appropriate for someone else to act. For
example, the Public Trustee might renounce if all beneficiaries of an estate
are adults of full capacity who want one (or more) of their number, rather
than the Public Trustee, to administer the estate.
The Public Trustee will renounce where the Public Trustee is appointed as
co-executor. The Public Trustee will not act as co-executor of an estate or
as a co-trustee of a trust. The main reason for this policy is that the internal
controls that exist within the Public Trustee office could not be applied in
situations where the Public Trustee is a co-executor or co-trustee. Further,
the Public Trustee will not act where the Public Trustee is potentially liable
for the actions of a co-executor.
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PTA section 12 allows the Public Trustee to take possession of a deceased
person’s property if the person’s personal representative or next
of kin has not done so. The provision is worded very broadly because it is
intended to give the Public Trustee broad authority to act in an expeditious
manner to protect a deceased person’s property.
When acting under section 12 the Public Trustee has the powers of an administrator
until someone is granted probate or administration. Section 12 does not authorize
the Public Trustee to distribute any property of the estate or dispose of any
property unless there is reason to believe that the estate might otherwise
suffer a loss. The Public Trustee might take possession of property under section
12 to preserve the property pending someone else’s anticipated appointment
as personal representative or to preserve it pending the Public Trustee’s
own application for a grant.
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PTA section 13 covers situations where a deceased person’s estate consists
only of personal property of a value that does not exceed the prescribed amount,
which is $5,000.49 If this condition is met and
no one has been granted probate or administration in Alberta, the Public Trustee
may administer the estate without obtaining a grant of administration.
This provision is designed to allow the Public Trustee to administer very
small estates expeditiously and with minimal cost. To this end, it allows the
Public Trustee to dispose of personal-use items as the Public Trustee considers
appropriate. The provision assumes that if the deceased’s estate includes
any money or property that can be readily converted into money, the money will
be exhausted in paying for the deceased’s burial and the cost of administering
the estate.
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PTA section 14 gives the Public Trustee priority to a grant of administration
in certain circumstances, notwithstanding any other enactment (such as the
Surrogate Rules). The reason for giving the Public Trustee priority is to enable
the Public Trustee to protect the interests of a person under legal disability
who has an interest in the estate. For the purposes of section 14, any minor
is a person under legal disability and so too is a dependent adult for whom
the Public Trustee is acting as trustee under the Dependent Adults Act. If
a person under legal disability has an interest in the deceased’s estate,
the Public Trustee could have priority under either section 14(2)(a) or section
14(2)(b).
Section 14(2)(a) gives the Public Trustee what might be referred to as a
step-into-the shoes priority. It gives the Public Trustee the same priority
to a grant that the person under legal disability would have had if they were
an adult of full capacity. An example is where the parent of a minor child
dies intestate leaving neither a spouse nor an adult interdependent partner.
If the child were an adult, the child would have priority (or a “preference”)
to a grant under rule 11(2)(b) of the Surrogate Rules, so the Public Trustee
could exercise this priority. Another example is where the deceased left a
will that appointed as sole executor a person who predeceased the testator,
and the residuary beneficiary is a dependent adult for whom the Public Trustee
is acting as trustee: rule 11(1)(b).
The Public Trustee’s priority under section 14(2)(a) flows from and
is limited to the priority that the person under legal disability would have
if of full capacity. Section 14(2)(b) goes further, in that it might give the
Public Trustee priority where the person under legal disability whom the Public
Trustee represents would not have had priority. When a person under legal disability
is interested in the estate, section 14(2)(b) gives the Public Trustee priority
to a grant over anyone who is neither an executor nor a resident of Alberta.
For example, suppose that the deceased resided in Alberta with their minor
child and is survived by an estranged spouse who resides in another province.
Assuming that the deceased died without a will or adult interdependent
partner, rule 11(2)(a) would give the surviving spouse priority to a grant.
However, because a minor is interested in the estate and the surviving spouse
is not a resident of Alberta, section 14(2)(b) overrides the Surrogate Rules
and gives the Public Trustee priority to a grant.
The Public Trustee will not necessarily exercise the priority given to it
by section 14. The object of giving the Public Trustee priority is to allow
the Public Trustee to protect the interest of the person under legal disability.
The Public Trustee might decide not to assert its priority if satisfied that
this will not put the person under legal disability at undue risk.
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PTA section 15 allows the Public Trustee to apply for and obtain a grant
where no one else has done so. This provision does not give the Public
Trustee priority to a grant. It is similar section 24 of the former Act, but
the new provision is broader in that it applies whether the deceased died testate
or intestate. The former provision only applied where the deceased was intestate.
The Public Trustee may apply for a grant under section 15 if the deceased
left property in Alberta and no one has obtained a grant of probate or administration.
If the deceased left a will, the Public Trustee cannot apply for a grant until
120 days after the person’s death; if the deceased did not leave a will,
the waiting period is 30 days. However, the Court may allow the Court to apply
before the end of the relevant period.
Section 15(4) provides that the Public Trustee may apply for a grant without
obtaining a renunciation from anyone who might have priority over the Public
Trustee and give notice of the application to the persons and in the manner
that the Public Trustee considers appropriate. Thus, the Public Trustee is
not necessarily required to give notice of the application to every person
who would ordinary be entitled to notice of an application for a grant under
the Surrogate Rules. However, the Public Trustee undoubtedly will be guided
by and will not lightly depart from the notice requirements of the Surrogate
Rules. In this regard, it may be noted that nothing in section 15 requires the
Court to grant the Public Trustee’s application for a grant.50
Section 15 is intended to provide the Public Trustee with a reasonably expeditious
procedure for acquiring the right to administer an estate if no one else has
done so. It is not intended to give the Public Trustee an opportunity to dash
in and get a grant under the nose of an executor or would-be administrator
who is a little bit tardy in applying for a grant. This is emphasized by section
15(5), which gives the Court a broad discretion to revoke the Public Trustee’s
section-15 grant and issue a grant of probate or administration to some other
person who is eligible to receive a grant.
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PTA section 16 provides the Public Trustee with an even more expeditious
procedure for acquiring the right to administer an estate. This section applies
if the gross value of a deceased person’s estate, as estimated by the
Public Trustee, does not exceed the prescribed amount of $50,000.51 If
this condition is met, the Public Trustee may elect to administer the estate
without applying for a grant. The election mechanism is available whether the
deceased died testate or intestate.52
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PTA section 28 applies upon the death of a person for whom the Public Trustee
has been acting as trustee under Part 4 of the DAA and Part 2, Division 4 of
the PTA. In this special circumstance, section 28(2) authorizes the Minister
of Justice and Attorney General to issue an order appointing the Public Trustee
to administer the deceased person’s estate. This order gives the Public
Trustee the powers and duties of an administrator appointed by the Court.
The Public Trustee may act in any capacity in which the PT is authorized
to act by an order of the Court.53 Thus, whenever
the Court may appoint someone to act in a particular capacity in relation to
an estate, the Public Trustee is a potential appointee. For example, the Court
might appoint the Public Trustee as judicial trustee of an estate under section
46 of the Trustee Act54 or as a “special
circumstances” administrator under section AEA section 24, or as an administrator
under AEA section 26 pending the outcome of litigation regarding a will or
contested grant.
Anyone contemplating making an application to have the Court appoint the
Public Trustee under any of the foregoing sections should bear in mind that
unless a statute expressly allows the Court to direct the Public Trustee to
perform a particular task or act in a particular capacity, the Public Trustee’s
consent is required to any such appointment, as well as to the terms of the
appointment.55 And even if a statute expressly
authorizes the Court to direct the Public Trustee to perform a function, the
Public Trustee must be given a reasonable opportunity to make representations
regarding the proposed appointment.56
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Section 6 of the Administration of Estates Act (“AEA”)
and associated rules in the Surrogate Rules require the Public Trustee to be
notified of an application for a grant if certain vulnerable persons are interested
in the estate. A person applying for a grant must notify the Public Trustee
of the application if any of the following is interested in the estate:57
- a dependent adult for whom the Public Trustee is trustee;
- a minor;
- a person declared to be a missing person under section 7 of the Public
Trustee Act.58
The Public Trustee must be given a copy of the application and served with
Form NC 24.1. The Public Trustee must be notified of the application if a person
who is interested in the estate was a minor when the deceased died, even if
they are 18 by the time the application is made.59
Where AEA section 6(1) requires notice to the Public Trustee, section 6(2)
stipulates that the application may not proceed unless the Public Trustee is
represented on the application or has expressed the intention not to be represented.
In most cases the Public Trustee will return Form NC 24.1 with a reply indicating
that the Public Trustee does not intend to be represented. In general, the
Public Trustee will only appear if the Public Trustee has reason to oppose
the application.
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AEA section 7 imposes a notification requirement that has considerable overlap
with the requirement in section 6. An applicant for a grant must notify the
Public Trustee of the application for the purposes of the Dependants Relief
Act if the deceased is survived by a dependant in either of the following
categories:60
- a child of the deceased who was a minor at the date of the deceased’s
death;
- an adult child, spouse, or adult interdependent partner of the deceased
for whom the Public Trustee is trustee under the DAA or predecessor legislation.
The Public Trustee may apply for maintenance and support on behalf of a dependant
in either of the above categories.61
The Dependants Relief Act does not expressly describe what the duty
of the Public Trustee or any other representative of a dependant is when notified
of the application for a grant. However, section 14 of the Dependants Relief
Act specifies that the Public Trustee (or guardian or other person representing
a child) has no duty to make an application on behalf of a dependant child
if all of the following conditions are met:
- at the date of death the deceased was living with their spouse or adult
interdependent partner;
- at the date of death all children of the deceased who were either minors
or unable to earn a livelihood by reason of disability were either living
with or being supported by the spouses or adult interdependent partners or
either of them;
the Public Trustee (or guardian or other person representing the child) is
satisfied that the child is receiving adequate maintenance and support.
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No single provision specifies all the circumstances in which the Public Trustee
must be notified of applications other than the initial application for a grant
of probate or administration. There are a number of relevant provisions. The
following three sections discuss provisions that may require notice to the
Public Trustee (1) as a trustee for a dependent adult, (2) where a minor is
interested in the estate, and (3) where a missing person is interested in the
estate. They also discuss circumstances in which the Public Trustee may be
entitled, otherwise than as personal representative, to take certain actions
regarding a deceased person’s estate.
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Rule 59, which is in Part 2 of the Surrogate Rules (Contentious Matters),
requires a copy of any document that is required to be filed on an application
under that Part to be served on all persons interested in the estate. Rule
57 enumerates the classes of persons who may be interested in an estate. Rule
57(f) identifies trustees of dependent adults as persons interested in the
estate. Thus, if the Public Trustee is trustee of a dependent adult who is
interested in an estate, the combination of rules 59 and 57(f) requires that
the Public Trustee be served with copies of any documents filed in connection
with an application under Part 2 of the Surrogate Rules.
Rule 75 allows a personal representative or a person interested in an estate
to make certain applications, including an application for an order requiring
formal proof of a will. Rule 78 specifies the classes of persons interested
in an estate who, notwithstanding rule 57, may make an application under rule
75. The list includes a trustee under the DAA. Thus, the combination of rules
75 and 78 authorizes the Public Trustee to make any of the applications mentioned
in rule 75 when the Public Trustee is trustee under the DAA of a person who
is interested in the estate.
Part 3 of the Surrogate Rules is concerned with accounting requirements.
It contains a number of rules that either require something to be served on
a person interested in the estate62or allow a person
interested in the estate to make an application or take some other action in
connection with the estate.63 If the Public Trustee
is trustee under the DAA for a person who is interested in the estate, the
Public Trustee is a person interested in the estate for the purpose of these
rules.64
Rule 100 provides for the personal representative to obtain a release from
residuary beneficiaries. The Surrogate Rules are silent on the matter of who,
if anyone, may sign a release on behalf of a beneficiary who is under a legal
disability. However, where acting as trustee under the DAA, the PTA or DAA
(or both) appear to give the Public Trustee ample authority to execute a binding
release on behalf of the Public Trustee’s client.65
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It will have been noted from the foregoing that there are a number of situations
in which the Public Trustee must be notified of an application or may take
some action because the Public Trustee, as trustee under the DAA, falls within
rule 57’s definition of person interested in an estate. However,
where a minor is interested in an estate, with one exception, the rules do
not expressly give the Public Trustee the status of a person interested in
an estate. While rule 57(f) refers to trustees of dependent adults, rule 57(h)
simply refers to minors as a class of persons who may be interested in an estate.
There is nothing in rule 57(h) that says that the Public Trustee or any other
representative of a minor is a person interested in the estate.
Rule 78, which defines person interested in an estate for the purposes
of applications under rule 75 (e.g. for an order requiring formal proof of
a will), does refer in clause (c) to the “Public Trustee or any other
person representing minors.” But for the purpose of other rules that
refer to a person interested in the estate (e.g. rules 59, 97(3), 103, 107,
108, 114), we are left with rule 57(h)’s reference to minors as a class
of persons interested in an estate. For example, if a minor is a beneficiary
of an estate, rule 59’s requirement to serve copies of documents on all
persons interested in the estate takes us to the definition of person interested
in an estate in rule 1 and from there to rule 57(h) and its reference
to minors. But there is nothing specific in the Surrogate Rules that says who
must be served on behalf of the minor.
It seems reasonable to assume that where rules such as 59, 103 and 107 require
a document to be served on a person interested in the estate who is a minor,
it is intended that the document will be served on someone on behalf
of the minor, rather than directly on the minor. The Surrogate Rules do not
make it clear who is to be served on behalf of the minor. However,
it seems reasonable to infer that it is intended that the Public Trustee must
be served unless some other person has been appointed by the Court to represent
the minor with respect to their interest in the estate.
It was noted above that rule 100 allows the personal representative to obtain
a release from residuary beneficiaries but is silent about the situation where
a residuary beneficiary is under a legal disability. It was also stated above
that where the Public Trustee is acting as trustee under the DAA, the Public
Trustee will have authority under the PTA or DAA to execute a binding release
on behalf of the Public Trustee’s client. However, where a minor is a
residuary beneficiary, there is no specific statutory authority for the Public
Trustee to execute a binding release on behalf of the minor.66
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Rule 59(2) provides that the Public Trustee must be notified of any application
under Part 2 (Contentious Matters) where a missing person67 is
interested in the estate. And rule 78(f) makes it clear that the Public Trustee
is entitled to make any of the applications contemplated by rule 75 as the
representative of a missing person.
When we come to Part 3 (Accounting), things once again become a
little less clear. What was said above about the Surrogate Rules’ definition
of person interested in an estate as it relates to minors also applies
to missing persons. The combination of rules 1(k) and 57(i) ensures that the
numerous references in Part 3 to a person interested in an estate include a
missing person. However, this combination of rules does not expressly make
the Public Trustee a person interested in an estate for the purposes of Part
3 just because a missing person is interested in the estate. As with minors,
however, it seems reasonable to infer that the various references in Part 3
to a person interested in an estate were intended to be read as references
to the Public Trustee as a representative of a missing person who is interested
in the estate.
If the missing-person order appoints the Public Trustee as trustee of the missing
person’s interest in the estate, and the latter is a residuary beneficiary,
PTA section 7(2)(a) appears to give the Public Trustee the authority to execute
a binding release under rule 100 on behalf of the
missing person. That is, the Public Trustee’s authority under PTA section
7(2)(a) to “administer, sell, dispose of or otherwise deal with” the
missing person’s interest in the deceased estate would, it is thought,
empower the Public Trustee to execute a binding release with respect to that
interest.
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This section deals with aspects of the Public Trustee’s protective
role in relation to minors’ financial interests that do no relate directly
to the Minors’ Property Act. Aspects that do relate directly
to the Minors’ Property Act are dealt with in the next section.
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PTA section 18 governs expenditures by the Public Trustee out of property
that the Public Trustee holds for a minor. It also governs transfers of property
by the Public Trustee to a minor’s guardian.
PTA section 18 applies in any circumstance where the Public Trustee is holding
property for a minor. It applies, for example, where property to which a minor
is entitled has been transferred to the Public Trustee by a personal representative,
insurance company or other third party in accordance with MPA section 9. It
also applies where the Public Trustee is personal representative of an estate
in which a minor is interested. In the latter case, however, the discretion
conferred on the Public Trustee by section 18 could be restricted or enlarged
by the terms of a will under which the Public Trustee is acting as personal
representative.68
Section 18(1)(a) gives the Public Trustee a broad discretion to expend all
or any of the property that the Public Trustee holds for a minor. The only
formal requirement is that Public Trustee be of the opinion that the proposed
expenditure is in the minor’s best interest. If necessary, the Public
Trustee may sell property held for the minor to provide funds for an expenditure
that the Public Trustee considers to be in the minor’s best interest.
If the Public Trustee declines to make a requested expenditure, the minor’s
parents (or any other person whom the Court considers to be an appropriate
person to make the application)69 could apply to
the Court under section 18(6). On such an application the Court may act on
its own view of whether the requested expenditure would be in the minor’s
best interest.
PTA section 18(1)(a) contemplates that the Public Trustee will make decisions
about a specific proposed expenditure and ensure that the property is expended
for the intended purpose. Section 18(1)(b), on the other hand, allows the Public
Trustee to transfer property to the minor’s guardian, and also, in effect,
to transfer decision-making responsibility regarding the property to the guardian.
Because the discretion given by section 18(1)(b) involves a transfer of both
control over the property and decision-making responsibility to the guardian,
it is subject to a monetary ceiling that does not apply to section 18(1)(a).
Section 18(1)(b) allows the Public Trustee to transfer property to a guardian
who has the power and responsibility to make day-to-day decisions regarding
the minor. This only applies where the value of the property held by the Public
Trustee for the minor does not exceed the prescribed amount of $5,000.70 The
guardian must sign an acknowledgment of responsibility and holds the property
as trustee for the minor.71 Transfer of the property
to the guardian discharges the Public Trustee’s obligation to the minor
with respect to the property.72
It may be noted that the monetary limit under PTA section 18(1)(b) refers
to the value of the property held by the Public Trustee for the minor, not
the value of the property to be transferred to the guardian. Thus, if the value
of the property held for the minor exceeds $5,000, the Public Trustee cannot
transfer any amount to a guardian under section 18(1)(b), even if the amount
transferred would not exceed $5,000. Similarly, if the amount originally held
by the Public Trustee exceeded $5,000 but expenditures have reduced the amount
to less than $5,000, the Public Trustee will not transfer the balance to a
guardian under section 18(1)(b).
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If a minor is interested in land that forms or formed part of a deceased
person’s estate, a personal representative or trustee may not sell the
land except with the consent of the Public Trustee or under an order of the
Court.73 Section 120 of the Land Titles Act must
also be complied with before the Registrar will register a transfer or mortgage
executed by an executor, an administrator of a deceased estate, or a trustee
under a will. The Public Trustee’s involvement (or the Court’s)
will be required unless the instrument is accompanied by an affidavit, based
on personal knowledge, stating that no minor is currently interested in the
estate, and that no minor was interested in the estate at the time of the deceased
owner’s death.74
The test under section 120 is whether any minor is or was ever interested
in the estate. An appropriately worded affidavit cannot be provided
if someone interested in the estate was a minor at the date of the deceased’s
death, even if they have long since reached adulthood and consent to the sale.
If a minor was ever interested in the deceased’s estate, the Public Trustee
must certify that the Public Trustee has no knowledge of any minors who are
now interested in the estate. Alternatively, if there are minors interested
in the estate the Public Trustee may consent to the sale. The other alternative
is to get a court order authorizing the disposition.
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AEA section 6(1) requires an applicant for a grant of probate or administration
to notify the Public Trustee of the application if a minor is interested in
the estate. AEA sections 6(3) through 6(5), which have been repealed by the
new PTA,75 went on to deal with monitoring of a
testamentary trustee by the Public Trustee. Through a combination of these
provisions and policy, the practice before 2005 was that the Public Trustee
would monitor any testamentary trust for a minor if the value of the minor’s
interest exceeded $4,000, unless the trustee (or one of the trustees) was a
trust corporation. The Public Trustee would also monitor non-testamentary trusts
in which the value of a minor’s interest exceeded $4,000, in the unlikely
event that the Public Trustee received notice of the trust.
Before 2005 the Public Trustee was not given any legislative direction as
to how to go about monitoring trustees of minors’ trusts. In practice,
the Public Trustee requested the trustee to provide an initial inventory of
trust assets and liabilities and to provide statements of receipts and disbursements
every two years while the trust continued. When provided with the statements,
the Public Trustee reviewed them but did not conduct an audit. That is, the
review proceeded from a presumption that the statements were a true record
of how the trustee had dealt with the trust assets. Only if gaps, discrepancies
or questionable transactions appeared on the face of the documents provided
by the trustee would the Public Trustee make further enquiries.
Under the new PTA, the Public Trustee has no duty to monitor a minor’s
trust in the absence of an express direction to do so in a trust instrument
or court order.76 PTA section 21(1) allows a testator
or other trust creator to appoint the Public Trustee to monitor a trustee on
behalf of minor beneficiaries – but only minor beneficiaries.77 If
so appointed, the Public Trustee is under a duty to monitor the trustee78 and
the trustee must provide the Public Trustee with the documents and information
identified by the Act and regulations.79 The Court
may, however, terminate the Public Trustee’s monitoring duties if the
Court considers that it is not in the minor’s best interest for the Public
Trustee to monitor the trustee (e.g. because of the cost).80
If appointed by the trust instrument to monitor, as soon as practicable after
receiving notice that the trust has come into effect, the Public Trustee must
obtain and review a copy of the trust instrument and an inventory of the trust’s
assets and liabilities.81 Then, at prescribed one-year
intervals, the Public Trustee must obtain and review:82
- an inventory of assets and liabilities at the beginning of the year;
- a statement of receipts and disbursements for the year;
- a separate statement of capital receipts and disbursements, if relevant
under the terms of the trust;
- an inventory of assets and liabilities at the end of the year.
- The Public Trustee’s duty is to conduct the sort of “face-value” review
that was described above, rather than to undertake an audit of the trustee’s
records.83 The Public Trustee’s monitoring
role does not authorize or require the Public Trustee to second-guess decisions
by the trustee that appear to be within the range of discretion given to
the trustee by the trust instrument.
- Nothing in section 21 gives the Public Trustee any power to compel the
trustee to do anything. However, the trustee has a duty to supply the information
that the Public Trustee is supposed to review.84 If
the trustee is uncooperative in the Public Trustee’s efforts to carry
out the latter’s monitoring duties, the Public Trustee may apply to
the Court for whatever order may be required to protect the minor beneficiary’s
interest.85
- PTA section 21(11) provides for the Public Trustee to be paid a prescribed
fee when appointed by a trust instrument to monitor a trust.86 However,
if the Public Trustee was already monitoring a trustee when the new PTA came
into force, the Public Trustee must continue to monitor the trust without
charging a fee until the minor beneficiaries reach the age of 18.87
If the trust instrument has not appointed the Public Trustee to monitor on
behalf of minor beneficiaries, the Court may direct the Public Trustee to do
so.88 The Court may also direct the Public Trustee
to monitor a court-appointed trustee, such as a trustee of a minor’s
property appointed under MPA section 10.89 If the
Court directs the Public Trustee to monitor, the presumption is that the Public
Trustee’s monitoring duties will be the same as if appointed to monitor
by a trust instrument.90 However, with the Public
Trustee’s consent, the Court may expand the scope of the Public Trustee’s
monitoring activities.91 The Public Trustee is
entitled to the same prescribed fee when directed by the Court to monitor as
when appointed by a trust instrument, except that the Court may specify a higher
fee if the order imposes more extensive duties on the Public Trustee.92
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Rule 17(1) of the Alberta Rules of Court says that in actions relating to
property in which a minor is interested, the minor is served by serving the
minor’s guardian ad litem, if there is one, or the guardian
of the minor’s estate if there is one.93 Rule
17(2) goes on to state that if there is no guardian ad litem or guardian
of the minor’s estate, the minor is to be served by serving the Public
Trustee “who shall then be guardian ad litem until the Court
otherwise orders.”94
However, it must be emphasized that rule 17(2) has been rendered inoperative
by subsequent statutory developments. In 1996 the former PTA was amended to
state specifically that the Public Trustee is not the guardian ad litem of
a minor, mentally incompetent person or missing person unless specifically
appointed by the Court.95 Insofar as it relates
to proceedings relating to a minor’s property, this matter is now dealt
with in MPA section 16. Section 16(1) provides that the Court may, with the
Public Trustee’s consent, appoint the Public Trustee as a minor’s
guardian ad litem in any proceeding relating to property in which
a minor is or may be interested. Section 16(2) provides that the Public Trustee
is the minor’s guardian ad litem only if appointed under subsection
(1).
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A number of provisions in the MPA allow an application to be made to the
Court. Section 14(2) provides that an application under the MPA may be made
by any person whom the Court considers appropriate to make the application.
Section 14(1) provides that procedure on applications are to be governed by
the Alberta Rules of Court or the Surrogate Rules.
Section 14(3) provides that if the minor is 14 years of age or older, and
application can only be made with the minor’s consent unless the Court
permits the application to be made without the minor’s consent. This
provision generalizes a requirement of the former MPA that applied to applications
to authorize a disposition of a minor’s property.96 The
new provision is broader than the former provision in in that it applies to
any application under the Act. For example, an application to approve a settlement
of a minor’s personal injury claim (see below) will require the minor’s
consent if the minor is 14 years of age or older, unless the Court allows the
application to be made without the minor’s consent.
MPA section 15(1) requires the Public Trustee to be given at least 10 days’ notice
of any application under that Act or of any application (even if not made under
the MPA) in which the existence, extent, nature or disposition of a minor’s
or unborn person’s interest in property is in issue. Where notice of
an application must be given to the Public Trustee, the application cannot
be dealt with until the Public Trustee is represented on the application or
has expressly declined to be represented.97 The
Public Trustee is entitled to make representations but is under no duty to
do so unless otherwise expressly provided by an enactment.98 The
Public Trustee may apply to rescind or vary an order that was made without
the required notice having been given to the Public Trustee.99 Section
15 does not apply to applications governed by the AEA, which has its own requirements
for notice to the Public Trustee.
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MPA section 2 replaces sections 2 through 9 of the former MPA. It gives the
Court broad authority to authorize a sale, lease, disposition of or action
respecting a minor’s property. Apart from a requirement that the Court
consider the disposition to be in the minor’s best interest, the only
constraint on the Court’s authority is that it cannot authorize a disposition
that is prohibited by an instrument that created the minor’s interest.
Section 2(2) allows the Court to give any direction and include any condition
or restriction that the Court considers appropriate regarding the manner of
carrying out the transaction authorized by the order. For example, if the transaction
is a sale of real estate that is registered in the minor’s name, the
order might impose a condition regarding the minimum sale price and give directions
as to who is authorized to execute the transfer of land.
Section 2(3) deals with the proceeds of disposition. Unless the proceeds
are less than the prescribed amount of $5,000,100 the
proceeds must be paid to a trustee appointed under MPA section 10 or to the
Public Trustee. If the sale proceeds do happen to be less than $5,000, the
Court might authorize some other disposition of the proceeds, such as payment
to the minor’s guardian or payment to the minor.
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MPA section 3 authorizes the Court to confirm a contract entered into by a
minor or a contract entered into by a minor’s guardian on behalf of the
minor. While section 2 deals with a particular type of contract – a sale
or disposition of property of the minor – an application under section
3 could relate to any type of contract. It might, for example, relate to a
contract under which the minor is to acquire, rather than sell, property. Or
it might relate to a contract under which the minor would acquire ongoing rights
and obligations: for example, a 5-year recording contract between a 16-year
old prodigy and a music company.
Again, the issue for the Court to determine is whether the proposed contract
is in the minor’s best interest. The section does not set out a list
of factors for the Court to consider in determining the minor’s best
interest. Undoubtedly, however, the Court will consider not only the objective
terms of the particular contract but also the particular circumstances of the
minor. And it seems reasonable to suppose that the Court will not be easily
convinced that a contract that imposes potentially onerous ongoing obligations
on a minor is in the minor’s best interest.
In confirming the contract the Court may direct how any person obligated to
the minor under the contract may discharge their obligation and may give any
other direction that the Court considers to be in the minor’s best interest.101 Unless
the Court has directed otherwise, any property (including money) to which the
minor is entitled under the contract must be delivered to a trustee appointed
under MPA section 10 or to the Public Trustee.102 A
contract that has been confirmed by the Court will have the same effect as
it would have had if the minor had entered into it as an adult, subject to
any directions given by the Court.103
Many contracts entered into by a minor are valid at common law. Some contracts
(e.g. for necessaries) are valid and binding on the minor. Other contracts
are valid and enforceable by the minor but are not binding on the minor unless
ratified by the minor after reaching the age of majority. Clause 3(5)(b) states
that section 3 does not diminish the effect that a contract entered into by
or on behalf of a minor would have apart from the section.104
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During the process that led to the enactment of the new PTA and MPA, Alberta
Justice circulated a consultation document that sought input on a number of
issues.105 A substantial proportion of the consultation
document was concerned with the process for approving settlements of minors’ legal
claims. These are usually claims for personal injuries suffered by the minor
or claims under the Fatal Accidents Act.
The consultation document discussed various alternatives to the existing
law, as embodied in former MPA section 15 and the common law. To put it briefly,
the law was that a settlement of a minor’s claim by a guardian, parent
or next friend bound the minor only if the Court confirmed the settlement.106 Notice
of the application to approve the settlement had to be given to the Public
Trustee.107
The consultation document discussed various alternatives to the existing
law and practice. This included, for example, a discussion of whether the Public
Trustee should be given statutory authority to approve certain settlements,
thereby making them binding on the minor. Ultimately, however, section 4 of
the new MPA leaves the law regarding settlements of minors’ legal claims
pretty much as it was before.
New MPA section 4 does not say anything about serving the Public Trustee
with notice of an application to approve a minor’s settlement. This is
because of the requirement, already mentioned, in MPA section 15 that the Public
Trustee be given at least 10 days’ notice of any application under the
MPA. The Public Trustee will not comment on proposed settlements unless
the Public Trustee has been served with notice of an application to approve
the settlement. It is thought that to do so might lead to a mistaken perception
in some quarters that Public Trustee review of a proposed settlement is a substitute
for court confirmation, which it is not.
The only really significant possible change in the law is found
in MPA section 4(5), which states that an “indemnity” given by
a minor’s representative is void. An indemnity is defined in section
4(1) as an agreement by a minor’s guardian or next friend, given in connection
with a settlement of the minor’s claim, to compensate a person for liability
or costs incurred by that person in the event that a claim is subsequently
made by or on behalf of the minor regarding a matter covered by the settlement.
The purpose of this provision is to prevent defendants from attempting an “end-around” the
common law and statutory protections of the court-approval requirement. As
such, the provision might or might not have effected a change in the law. This
is because there is a distinct possibility that such an indemnity would have
been regarded as void at common law as being contrary to public policy.108
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The discussion under this heading relates primarily to sections 5 through
9 of the new MPA, but the starting point for the discussion is section 6(1)
of the former PTA, which read as follows:
(1) Notwithstanding anything in any other Act, any money other than wages
or salary and any property to which a minor is entitled under an intestacy
or under a will, settlement, trust deed, or in any other manner whatsoever,
and for whose estate no person has been appointed guardian by the issue of
letters of guardianship or appointed as the trustee of the estate of a minor,
shall be paid or transferred to the Public Trustee.
It will be noted that former section 6 applied where a minor was “entitled” to
money or other property in any manner whatsoever, unless the entitlement was
to money payable as wages or salary. In saying that the money or property “shall
be paid or transferred to the Public Trustee,” section 6 was meant to
impose a duty on someone to transfer the property or money to the Public Trustee.
But it did not specify who this someone might be. Section 6 did not specify
what the consequences would be for someone who failed to comply with its requirement
to deliver the money or property to the Public Trustee.
Sections 5 through 9 of the new MPA address the following question. If a
person is under an obligation to deliver property or pay money to a minor,
or would be under such an obligation if the minor were an adult, how can they
discharge the obligation? Section 5 answers this question by stating that,
notwithstanding any other Act, a person who is obligated to a minor (i.e. under
a duty to deliver property to a minor) may discharge the obligation only in
accordance with one of the following provisions:
- section 3(3), which applies where a person is obligated to a minor under
a contract that has been confirmed by the court;
- section 4(4), which applies to proceeds of a court-approved settlement;
- section 6, which applies where a minor has directly entered into a contract,
and someone is obligated to the minor under that contract;
- section 7, which applies where a trustee is authorized by a trust instrument
or court order to receive the property;
- section 8, which applies to obligations (subject to certain exceptions)
under the prescribed amount of $5,000;
- section 9, which allows a person who is obligated to a minor to discharge
the obligation by delivering the relevant property to the Public Trustee.
The following paragraphs make a few observations about the procedure for
discharging obligations to a minor under MPA sections 6 through 9
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Delivery to minor under contract – section 6
MPA Section 6 extends the exception in former PTA section 6 regarding wages
and salary to any situation where a minor has entered into a contract that
purports to impose an obligation on the other party to deliver property (including
money) to the minor.109 Section 6(1) specifies
that a person obligated to a minor under a contract with the minor may
discharge the obligation by delivering the relevant property to the minor.
The answer to the question, “What relevant property?” is supplied
by the definition of “person obligated to a minor” in section 1(d).
It is property (including money) that the person is obligated to deliver to
the minor under the contract.
Section 6(2) says that section 6(1) does not make binding on the minor a
contract that would not otherwise be binding on the minor or deprive the minor
of any relief to which the minor might otherwise be entitled in consequence
of the contract’s not being binding on the minor. Many minors’ contracts
are not binding on the minor unless ratified after the minor attains the age
of majority. If property to which the minor is entitled under such a contract
is delivered to the minor party in accordance with the contract, the contracting
party satisfies their contractual obligation to deliver the property to the
minor. But delivery of the property to the minor in accordance with section
6(1) would not prevent the minor from disowning the contract and seeking appropriate
relief. In other words, the minor might be precluded from suing on the
contract, but would not be precluded from seeking relief from the
contract.
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Delivery to trustee – section 7
Taken at face value, former PTA section 6 might have been read as overriding
the express terms of a trust instrument authorizing a trustee to hold property
for a minor. For example, if a will appointed one person as executor and another
person as trustee of funds to which a minor was entitled under the will, section
6 could be read as requiring the executor to pay the minor’s trust funds
to the Public Trustee, rather than to the trustee.110
MPA Section 7 makes it clear that a person obligated to a minor may discharge
the obligation by delivering the property to a trustee who is authorized by
a trust instrument or court order to receive it. The reference to a trustee
authorized by court order to receive property ties in with MPA section 10,
which is discussed below.
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Smaller obligations – delivery to guardian or minor – section
8
Under the former PTA, if a person was holding property valued at $4,000 or
less to which a minor was entitled, the Public Trustee could consent to them
transferring the property to another person who, in the opinion of the Public
Trustee, was a responsible adult.111 In practice,
the Public Trustee did not conduct an in-depth investigation to determine just
how “responsible” the proposed transferee might be. Generally speaking,
the Public Trustee would form the requisite opinion on the basis of a statutory
declaration completed by the proposed transferee.
Under new MPA section 8, if the value of the obligation does not exceed the
prescribed amount of $5,000,112 the person obligated
to a minor may discharge their obligation by delivering the property to a guardian
having the power and responsibility to make day to day decisions regarding
the minor. If the minor in question has a legal duty to support another person,
the person obligated to the minor may deliver the property to the minor. In
either case, the person obligated to a minor is discharged of their obligation
only if they obtain from the guardian or minor an acknowledgment of responsibility
in prescribed form.113 The Public Trustee’s
involvement or consent would not be required.
Section 8 does not affect the duty of a trustee to deal with trust property
in accordance with the terms of the trust.114 Suppose,
for example, that a person is holding $4,000 on an express trust for a minor.
Section 8 does not provide the trustee with a statutory means of abandoning
or delegating their duties as trustee. Whether the trustee may deliver the
property to the minor’s guardian (or to the minor) must be determined
by reference to the trust instrument and the law of trusts, rather than to
section 8.
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Deliver to Public Trustee – section 9
If a person obligated to a minor cannot discharge the obligation under any
of sections 6 through 8, they may do so by delivering the relevant property
to the Public Trustee.115 Examples of where delivery
of property to the Public Trustee may be the only way to discharge an obligation
to a minor include:
- a minor is entitled to property with a value in excess of $5,000 under
the Intestate Succession Act, or under a will that does not appoint
a trustee of the minor’s interest;
- a minor is entitled to more than $5,000 as the designated beneficiary
of a life insurance policy or RRSP that does not appoint a trustee for the
minor’s interest;
- a minor has won a draw for a prize valued at more than $5000.
Even if the person obligated to a minor could discharge the obligation under
one of sections 6 through 8, section 9(2) allows the person to discharge the
obligation by delivering the property to the Public Trustee, if the latter
is willing to accept the property. An example of where this might occur is
where a personal representative holds property of a value less than $5,000
to which a minor is entitled. The personal representative could discharge their
obligation by delivering the property to the minor’s guardian under section
8 and getting an acknowledgment of responsibility. But the personal representative
might have reasons for preferring to deliver the property to the Public Trustee.
Although not bound to accept the property from the personal representative
in these circumstances, the Public Trustee would normally do so.
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Former PTA section 6 provided that property or money (other than wages) to
which a minor was entitled had to be delivered to the Public Trustee unless
someone “has been appointed guardian by the issue of letters of guardianship
or appointed as the trustee of the estate of a minor.” Although section
6 referred to letters of guardianship, the operative concept in Alberta has
been the appointment of a trustee of a minor’s estate in accordance with
the AEA116 and Surrogate Rules.117
Section 10 of the new MPA authorizes the Court to appoint a trustee of a
minor’s property. Section 10(1)(a) provides for the appointment of a
trustee of particular property to which a minor is entitled or likely to become
entitled. Section 10(1)(b) provides for the appointment of a trustee of the
minor’s property generally. An order under section 10 would not apply
to property for which a trustee has been appointed by a trust instrument.118
In practice, applications for the appointment of a trustee of a minor’s
estate have usually been made because a minor has become entitled to particular
property of substantial value, such as an inheritance, the proceeds of a life
insurance policy, or the proceeds of a personal injury settlement. The application
is really about the particular property to which the minor has become entitled,
but the order resulting from a successful application would appoint a trustee
of the minor’s entire “estate”. If the application is really
about specific property to which the minor is entitled, it seems reasonable
for the legislation to allow for an order that appoints a trustee of that specific
property. That is the purpose of section 10(1)(a).
Section 10(2) says that the Court may appoint a trustee of particular property
only if the Court thinks that it is in the minor’s best interest to do
so, having regard to at least three matters:
- the apparent ability of the proposed trustee to administer the property;
- the merits of the proposed trustee’s plan for administering the
property;
- the potential benefits and risks of appointing the proposed trustee compared
to other available alternatives.
In many if not most cases, the only other available alternative is likely
to be administration of the property by the Public Trustee. Thus, the risk-benefit
analysis contemplated by the third bullet is likely to come down to an analysis
of the comparative advantages and disadvantages of administration of the property
by the Public Trustee or by the proposed trustee.
If asked to appoint a trustee of the minor’s property generally under
section 10(1)(b), the Court must consider the matters mentioned in section
10(2). The Court must also consider whether the interest of the minor is likely
to be better served by appointing a trustee of the minor’s property generally
than by an order appointing a trustee of specific property.119 In
effect, the onus is on the person seeking an order under section 10(1)(b) to
satisfy the court that it is necessary, or at least desirable, to grant the
more encompassing type of trusteeship order.
Section 10(6) says that an order appointing a trustee of minor’s property
may include any provision, limitation or direction that the Court considers
to be in the minor’s best interest. It then gives a few illustrations
of what it has in mind:
- requiring the trustee to pass their accounts periodically;
- limiting the duration of the trusteeship;
- specifying or limiting the trustee’s investment powers;
- providing for compensation of the trustee.
Section 11 deals with security to be provided by the trustee. Following the
approach of AEA section 5, MPA section 11 starts by creating
a presumption that a person may be appointed trustee only after providing a
bond or other security, of a nature and value and in terms approved by the
Court. However, section 11(3) states that security is not required if the trustee,
or one of the trustees, is a trust corporation.
Like AEA section 5(3), MPA section 11(4) authorizes the Court to dispense
with the requirement of a bond or other security. Unlike the AEA, MPA section
11(4) attempts to provide the Court with a wee bit of guidance as to how to
approach a request to dispense with security. The Court is directed to consider
the minor’s best interest, having regard to “other safeguards that
are or will be in place.” For instance, in certain circumstances the
Court might consider that a periodic accounting requirement imposed under section
10(6) would be an adequate substitute for the trustee being required to provide
security.
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Circumstances might come to the attention of the Public Trustee or some other
person that suggest that it would be in the interest of the minor for the Public
Trustee to take possession of the property for safekeeping. In these circumstances,
the Public Trustee, or any other person whom the Court considers to be an appropriate
person to make the application, could apply under MPA section 13 for an order
directing a person who is in possession of the minor’s property to deliver
it to the Public Trustee. The Court could grant the requested order if satisfied
that it is in the minor’s best interest to do so.
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PTA sections 7 through 11 deal with the Public Trustee’s role with
respect to the property of missing persons and unclaimed property.
Section 7(1) allows the Court to declare a person to be a missing person
if they cannot be located after reasonable enquiry. Upon making this declaration
the Court may appoint the Public Trustee as trustee of either particular property
of the person or of the missing person’s property generally.
Typically, an application under this section will be initiated by someone
who is under a duty to pay money to a person who cannot be located. For example,
a personal representative who cannot locate a beneficiary who is entitled to
money (or other property) from the deceased’s estate might apply under
section 7. If the Court is satisfied that reasonable efforts have indeed been
made to find the beneficiary, the Court may declare them to be a missing person
and appoint the Public Trustee as trustee of the money to which they are entitled
from the estate.120
Section 7(2) sets out the powers of the Public Trustee upon being appointed
trustee of the missing person’s property. These include the broad power
to administer, sell, dispose of or otherwise deal with the property of which
the Public Trustee is trustee. More specifically, the Public Trustee may pay
money that the missing person would have been liable to pay or for the benefit
of a spouse, adult interdependent partner or dependent child of the missing
person.
PTA section 8 allows the Public Trustee to take or retain possession of property
without a court order. Section 8(1) applies where the property in question
is not already in the Public Trustee’s possession. It allows the Public
Trustee to take possession of the property for safekeeping if the Public Trustee
is satisfied that: (a) after reasonable enquiry the owner cannot be located;
(b) it is appropriate for the Public Trustee to take possession of the property;
and (c) it would be impractical or uneconomic to obtain a court order under
section 7. The Public Trustee will not lightly take possession of property
under section 8(1). For example, the Public Trustee will not generally accept
property from a personal representative without a court order under section
7.
Section 8(2) applies where the Public Trustee is already in possession of
property of a person who cannot be located. It would apply, for example, where
the Public Trustee is administering the estate of a deceased person and one
of the beneficiaries cannot be located at the time the estate is to be distributed.
Section 8(2) requires the Public Trustee to continue to hold the property of
this missing beneficiary.
Section 8(3) authorizes the Public Trustee to convert the property of the
missing person into money if the Public Trustee is of the opinion that it is
in their best interest to do so.
The Public Trustee must be given notice of any court application regarding
property that is the subject of an order under section 7 or that the Public
Trustee is holding under section 8. The Public Trustee
is authorized to expend any portion of the funds held under section 7 or 8
for the purpose of attempting to locate the person entitled to the property.122
PTA section 11 requires the Public Trustee to retain the property (or its
proceeds) held under section 7 or 8 for at least ten years. In the
case of property of which the Public Trustee is trustee under section 7, the
ten-year period begins to run from the date of the missing-person order. In
the case of property held under section 8, the ten-year period begins to run
from the date that the Public Trustee causes a notice in prescribed form to
be published in the Alberta Gazette.123 The
Public Trustee is not required to publish a notice in the Alberta Gazette when
a missing-person order is made under section 7. However, the Public Trustee
intends to do so and to hold the property for at least ten years from the date
of publication of the notice.
If the property held by the Public Trustee is money or is converted into
money, it will be paid into the common fund and the amount paid in will be
credited to the person’s interest-bearing guaranteed account.124 Once
the 10-year period expires the Public Trustee may transfer the funds (including
accrued interest) to the Province’s General Revenue Fund.125 Upon
transferring the funds to the General Revenue Fund, the Public Trustee must
publish a notice in the Alberta Gazette.126 A
person who would have been entitled to the property before it was transferred
to the General Revenue Fund never loses the right to establish their entitlement
and get back the funds, but no interest accrues on the funds after they are
transferred from the Public Trustee to the General Revenue Fund.127
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1- SA 2004, cP-44.1, repealing Public Trustee
Act, RSA 2000, cP-44. References to the repealed act will be to the “former
PTA”.
2- SA 2004, cP-18.1, repealing Minors’ Property
Act, RSA 2000, cM18. References to the repealed act will be to the “former
MPA”.
3- As part of the review, in late 2002 Alberta Justice
and the Public Trustee circulated a Public Trustee Act Review Consultation
Document.
4- See former PTA s. 39(1).
5- As reported in Contradictors v. Attorney-General [1999]
2 NZLR 523 at 530 (C.A.). In New Zealand the corporate entity is now known
as Public Trust.
6- PTA s. 3. The former Act did not expressly characterize
the Public Trustee as a corporation sole, but the Act gave the office corporate
attributes such as perpetual succession to property. The office was described
as a corporation sole in at least one case: Charpentier Estate v. Smolski [1975]
A.J. 201 (M.C.) at para. 5.
7- Former PTA s. 2(1).
8- PTA section 4.
9- Sections 6(2) and 6(3) are similar to sections
19(3) and 19(4) of the former PTA. The main difference is that the former sections
seemed to require the Public Trustee’ consent in every case
where the Court was considering appointing the Public Trustee to act in some
capacity.
10- Alberta Justice Annual Report
[Office of the Public Trustee Estates and Trusts Balance Sheet as at March
31, 2004, p. 120]. The table in the text assigns the amount shown in the balance
sheet for bank accounts (about $5 million) and most of the amount shown as
accrued investment income to the common fund; the remainder of the accrued
investment income is assigned to the special reserve fund. The amounts shown
in the table exclude the value of non-financial assets, such as real estate
and tangible personal property administered by the Public Trustee on behalf
of clients.
11- S.A. 1934, c. 20.
12- S.A. 1937, c. 24.
13- Contradictors v. Attorney-General [1999]
2 NZLR 523 at 528 (C.A.).
14- Former PTA ss 25, 27, 28.
15- Former PTA s. 27(1).
16- Former PTA s. 27(3), s. 28(3).
17- Former PTA s. 28.
18- Former PTA s. 28(1).
19- Former PTA s. 28(3)(a).
20- Former PTA ss 28(2), 28(3)(b).
21- Former PTA s. 28(6).
22- Former PTA ss 27(2), 28(5).
23- PTA s. 31(1).
24- One function that is not mentioned in the
text is to serve as an assurance fund to compensate persons who suffer loss
or damage as a result of an act or omission of the Public Trustee: see PTA
s. 35(1), (2); former PTA s. 28(11).
25- PTA s. 33.
26- PTA s. 33(6).
27- PTA s. 34(1). No categories have been prescribed
at the time of writing, so all guaranteed accounts constitute a single category.
28- PTA s. 34(2).
29- AR 241/2004 s. 10(1).
30- PTA s. 36(1). At the time of writing the regulations
do not qualify or elaborate the Act’s “prudent-investor” standard.
31- Former PTA s. 25(4)(b).
32- PTA s. 32(4).
33- AR 241/2004, s. 8.
34- PTA s. 37(1), (3). This section does not prevent
the Public Trustee from retaining an investment in the form in which it comes
into the Public Trustee’s hands if the Public Trustee considers it reasonable
to do so: s. 37(4).
35- The term client is defined in PTA
section 1(a) as any person, trust or estate for whom the Public Trustee holds
property or to whom or for whose benefit the Public Trustee provides any service
or performs any task or function.
36- PTA s. 40(2).
37- The schedules may be found on the Public Trustee
page of the Alberta Justice website: http://www.justice.gov.ab.ca/public_trustee/default.aspx
38- PTA s. 40(4).
39- DAA s. 36(1)(c).
40- DAA s. 47.
41- DAA ss 30(3), 47(b).
42- See AR 289/1981, s. 4.
43- DAA s. 70(1).
44- PTA s. 72.
45- DAA s. 73(1).
46- DAA s. 74.
47- PTA s. 5(a).
48- PTA s. 6(1).
49- AR 241/2004, s. 2(1).
50- PTA section 15 provides an example of the
point mentioned earlier that the Alberta legislation owes much – but
not everything – to the New Zealand legislation. PTA section 15 is similar
to sections 77 and 80 of the Public Trust Act 2001. One difference
is that the New Zealand provisions go out of their way to make it clear that
if the conditions for Public Trust to apply for a grant have been satisfied,
it is entitled to a grant as of right. The Alberta provision does not go that
far.
51- AR 241/2004, s. 3(1).
52- This is a change from the former Act, under
which the election procedure was available only if the deceased died intestate.
53- PTA s. 5(d)(i).
54- The administration of any deceased estate
is a trust for the purposes of Trustee Act section 46: see TA s. 46(2).
55- PTA s. 6(2).
56- PTA s. 6(3).
57- AEA s. 6; Surrogate Rules, r. 26(1).
58- AEA s. 6(6); PTA s. 1(h).
59- AEA s. 6(1)(a).
60- AEA s. 7(4); Dependants Relief Act,
s. 13(3). There is also considerable overlap between AEA s. 7(4) and DRA s.
13(3). AEA s. 7(4) requires a copy of the application for a grant to be “sent” to
the Public Trustee; DRA s. 13(3) requires the “trustee” to be served
with notice of any application relating to the estate in which the dependant
is interested.
61- DRA, s. 13(2).
62- E.g. rules 103, 107.
63- E.g. rules 97(3), 108, 114.
64- See rules 1(k) and 57.
65- See PTA ss 25(1), 26(1); DAA s. 63.
66- More generally, there is nothing in the PTA
or any other enactment that gives the Public Trustee a broad authority to enter
into contracts on behalf of minors.
67- As mentioned earlier, the PTA defines missing
person as a person declared to be missing by an order under section
7 of that Act.
68- PTA s. 18(7).
69- An application under the PTA may be made by
any person whom the Court considers appropriate to make the application: PTA
s. 39.
70- AR 241/2004, s. 4(1).
71- PTA s. 18(3), (5); AR 241/2004, Form 3.
72- PTA s. 18(4).
73- Devolution of Real Property Act,
s. 11.
74- Land Titles Act, s. 120(1)(d).
75- PTA s. 48.
76- PTA s. 20.
77- See PTA s. 21(6)(c), (7).
78- PTA s. 21(2).
79- PTA s. 21(3).
80- PTA s. 21(9).
81- PTA s. 21(2)(a); AR 241/2004, s. 6(1).
82- PTA s. 21(2)(b); AR 241/2004, s.6(2).
83- See, in particular, PTA s. 21(4) and (6).
The trust instrument could, however, require the trustee to provide the Public
Trustee with audited financial statements to review: PTA s. 21(2)(c).
84- PTA s. 21(3).
85- PTA s. 21(5)(c).
86- At the time of writing a fee has yet to be
prescribed.
87- PTA s. 21(12).
88- PTA s. 22(1)(a).
89- PTA s. 22(1)(b).
90- PTA s. 22(2).
91- PTA s. 22(3).
92- PTA s. 22(4).
93- ARC, r. 17(1).
94- ARC r. 17(2).
95- Former PTA s. 5(4) – (8).
96- Former MPA s. 3; see also ARC rule 583.
97- MPA s. 15(2).
98- MPA s. 15(3).
99- MPA s. 15(4).
100- AR 240/2004, s. 1.
101- MPA s. 3(2).
102- MPA s. 3(3).
103- MPA s. 3(4).
104- MPA s. 3(5).
405- Public Trustee Act Review Consultation
Document (2002), paras 34-59.
106- Former MPA section 15 was cast in permissive
terms. It said that an application could be made to the Court to confirm a
settlement and that confirmation of the settlement discharged the other party
from all further claims arising from the injury. But the common law backdrop
to this was that the settlement was not binding on the minor unless confirmed
by the Court.
107- Former MPA section 15(1).
108- It has been so held in at least one case: Stevens
v. Howitt [1969] 1 O.R. 761 (Ont. H.C.J.).
109- MPA s. 6(1) begins, “Subject to the
regulations…” At the time of writing, the regulations do not qualify
or limit the effect of section 6.
110- But see Re Wison Estate (1955-56)
17 W.W.R. 348 (Alta D.C.), in which the Court declined to give section 6 such
a long reach.
111- Former PTA s. 7(1)(c)(i)(C).
112- AR 240/2004 s. 2(1).
113- MPA s. 8(2)(b); AR 240/04, Form 1 (guardian)
or Form 2 (minor).
114- MPA s. 8(5).
115- MPA s. 9(1).
116- See in particular AEA s.1(e)(iv) (as am.
by new PTA s. 18(a)) and s. 5, regarding bonds
117- Surrogate Rules, rules 50-54.
118- See the qualifications in MPA s. 10(1)(a)
and 10(5).
119- MPA s. 10(3).
120- As mentioned in the text, PTA section 7(1)
contemplates that the Public Trustee could be appointed as trustee of particular
property or of the missing person’s property generally. It is anticipated
that the narrower type of order (particular property) would usually be regarded
as more appropriate than the broader.
- PTA s. 9(1). This does not apply to applications
governed by the Administration of Estates Act: PTA s. 9(2). The requirements
regarding notice to the Public Trustee of applications where a missing person
is interested in an estate were discussed above.
122- PTA s. 10.
123- PTA s. 11(2)(b); AR 241/2004, s. 1.
124- See PTA ss 31(2), 33. If the Public Trustee
is trustee of a missing person’s property pursuant to a court order under
section 7, it is conceivable that the person order might direct the Public
Trustee to invest the missing person’s money separately, that is, outside
of the common fund: PTA s. 37(1).
125- PTA s. 11(3). If the property is not already
in the form of money, it will be converted into money.
126- PTA s. 11(4); AR 241/2004, s. 1.
127- PTA s. 11(5), (6).
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