Thursday, March 17, 2016
Parent wants to control investments for child's trust, but he can't
Posted by Lynne Butler
"I am as well as my daughter, beneficiaries to my fathers estate. With one of his sisters as executor, things seemed to go well until time for distribution. She seems to think that I am obligated to acquire a sin # for my daughter so that her portion can go into an RESP through the executors personal broker. I kindly refused, stated that I have my own broker that has offered me better investment vehicles with more solid and guaranteed profits. Her broker was fined back in 2014 for off book investing which resulted in lost investments. Since I have made these revelations, she flat out refuses to budge and is steadfast in her decision. What would be my best option to have these funds released with the least amount of hassle?"
You can't do this without "hassle" because you'd have to ask a judge to allow it. There are rights and responsibilities that you are ignoring.
I'm assuming that your daughter's share is being held in trust to a certain age. That being the case, the executor is also the trustee of your daughter's trust, unless the will says otherwise. This means she has full discretion to invest the funds as she sees fit and to choose her investment advisors. That's her job as executor and trustee. If she makes bad decisions and causes a loss to the estate, she can be held personally liable for the loss.
Parents find it hard to believe they have no say in it, but they don't. Parents have no control over something that is in someone else's estate, since it has nothing to do with them. The will has the final say as to who makes the decisions regarding the trust. If your father had wanted you to be the trustee of your daughter's inheritance, he could have said so in his will.
An executor is not permitted to delegate any of her duties that require discretion or judgment. So, she can hire a broker as long as she is making the decisions as to investment goals, timeline, etc, but she can't just hand the whole thing over to someone (including you) and wash her hands of it. If she did, she would be in breach of her fiduciary duty to the estate. So, she isn't being difficult on purpose; she is bound by rules.
You also need to consider that when funds are left in trust for a minor (or anyone, for that matter), the will states what would happen with the funds if the child passed away before reaching the stated age of inheritance. If the funds were paid over to you, the executor would lose control of them and if your daughter didn't live to the age of inheritance, the executor would be unable to complete her duties to that remaining beneficiary.
In my opinion, it would require a court order because you are asking to overturn a major part of your father's will in removing his trustee from this trust. I doubt that you would be successful in your application if it were based solely on fears that things might go wrong. Anyone could make that claim. Unfortunately you'd have to wait until the investments actually did go wrong before you'd be justified in trying to cut out her chosen broker.
I know this isn't the answer you wanted to hear, but as far as I can tell, the executor is just doing her job the way she should. You should be providing her with a SIN number.