Canadian court declines application to remove trustees of discretionary trust

Monday, 19 September 2022
The Supreme Court of British Columbia has refused a request from a mother to remove trustees of a discretionary trust after they rejected her requests for funds for her son, the beneficiary of the trust.
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On being diagnosed with cancer in 2014, Kenneth Zaleschuk Senior (the deceased) had created a discretionary trust for his son, Kenneth Zaleschuk Junior, a young adult with learning disabilities who was unable to live independently. The deceased had been the initial trustee, but the role passed to his sisters following his death in 2015.

Zaleschuk Jr. lives with his mother, Marina Zaleschuk, who in the course of the past seven years has made various requests to the trustees for funds. Several of these requests have been declined, although the trustees have released CAD26,000 from the trust to fund some of them.

The litigation was brought to replace the trustees with Zaleschuk, who also holds power of attorney for her son. The trustees alleged that although the petition was brought in Zaleschuk Jr.’s name, it was in reality being driven by Zaleschuk. They said that they would be happy to step down as trustees but only if they were replaced by a professional trustee, rather than Zaleschuk.

The court considered the reasons behind the trustees declining some of the requests for funds to be proper execution of the trust within the scope of their discretion. It also noted that the deceased’s lawyer and financial advisor gave evidence that the trust was established to safeguard the funds from Zaleschuk.

The court found that the trustees exercised their discretion to ensure that there are sufficient funds to care for Zaleschuk Jr. for the rest of his life. “At some point in the future, he will not be able to rely on living with his mother,” the judge said. “The Trustees are administering the Trust in a fashion that will best ensure that there are funds available for his care in his later years.”

Accordingly, the court dismissed the petition to remove the trustees (Zaleschuk (Re), 2022 BCSC 943).


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