An undertaking is a promise that carries legal consequences if it is not kept. In most Canadian jurisdictions, a person who is applying to become the trustee for an incapacitated adult will be required to sign some form of Trustee's Undertaking. By signing the undertaking, the trustee is acknowledging the high standard of care that he or she is expected to uphold and he or she is agreeing to abide by the rules and standards imposed on trustees by law.
Trustee's Undertakings usually contain a list of actions that the trustee promises that he or she will not do, such as:
- using the incapacitated adult's money for himself or herself
- using the incapacitated adult's money to support people who are not dependants of the incapacitated adult
- mingling his or her own money with that of the incapacitated adult
- buying property from the incapacitated adult
- taking gifts or loans from the incapacitated adult
- changing beneficiary designations on the incapacitated adult's policies or plans
In some provinces, the trustee is required to post a bond and may also be required to provide any sureties that the court directs. The bond usually replaces the need for a written Trustee's Undertaking because the bond is a form of insurance that the trustee will behave as promised.
For more information, talk to your estate planning lawyer, or see my book, "Protect Your Elderly Parents".
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