Acts and Regulations

2015, c.21 - Trustees Act

Section 42
Disposition versions

Full text
Total return investment
42(1)The following definitions apply in this section.
“assets” means trust property that is subject to a total return investment policy.(actifs)
“specified percentage” means a percentage specified in the trust instrument for the purpose of this section.(pourcentage fixé)
“total return investment policy” means a policy of investing property so as to obtain the optimal return without regard to whether the return is characterized as income or capital.(politique de rendement à placement total)
“valuation period” means the valuation period determined under subsection (10).(période d’évaluation)
42(2)For the purposes of this section, the following words in a trust instrument constitute a reference to a total return investment policy:
(a) “on percentage trusts”; or
(b) “total return”, when used with reference to investments.
42(3)In a trust instrument, a settlor may direct or authorize the trustees to adopt a total return investment policy with respect to all or part of the trust property.
42(4)Subject to subsection (5), the trustees of a charitable trust may adopt a total return investment policy with respect to trust property, whether or not the terms of the trust contain a direction or authorization to that effect.
42(5)A total return investment policy may not be adopted under subsection (4) if, in the trust instrument, the settlor expressly directs the trustees not to adopt a total return investment policy with respect to that trust property.
42(6)If a total return investment policy is adopted, the trustees shall determine the net value of the assets at the beginning of each valuation period.
42(7)For the purposes of this section, the net value of the assets is the amount equal to the fair market value of the assets less any liabilities in relation to those assets.
42(8)If a total return investment policy is adopted, the trustees shall, in each fiscal period, pay to the persons who would otherwise be the income beneficiaries, or apply to the purposes of the trust, an amount equal to the specified percentage of the net value of the assets at the beginning of the valuation period.
42(9)The trustees shall:
(a) if possible, pay or apply the amount required under subsection (8) from income earned during the fiscal period from the investment of the assets;
(b) if the income referred to in paragraph (a) is insufficient to pay or apply the amount required under subsection (8), pay or apply an amount from capital; and
(c) if the income earned during the fiscal period from the investment of the assets exceeds the amount paid or applied under subsection (8), add the amount of the excess to the assets.
42(10)The valuation period for assets that are invested in accordance with a total return investment policy is determined as follows:
(a) the first valuation period begins
(i) on the date of the settlement, or
(ii) in the case of a testamentary trust, one year after the date of the testator’s death;
(b) the second and subsequent valuation periods begin immediately after the end of the previous valuation period;
(c) a valuation period is the shortest of the following:
(i) three years;
(ii) the period specified in the trust instrument; and
(iii) the period selected by the trustee.
Total return investment
42(1)The following definitions apply in this section.
“assets” means trust property that is subject to a total return investment policy.(actifs)
“specified percentage” means a percentage specified in the trust instrument for the purpose of this section.(pourcentage fixé)
“total return investment policy” means a policy of investing property so as to obtain the optimal return without regard to whether the return is characterized as income or capital.(politique de rendement à placement total)
“valuation period” means the valuation period determined under subsection (10).(période d’évaluation)
42(2)For the purposes of this section, the following words in a trust instrument constitute a reference to a total return investment policy:
(a) “on percentage trusts”; or
(b) “total return”, when used with reference to investments.
42(3)In a trust instrument, a settlor may direct or authorize the trustees to adopt a total return investment policy with respect to all or part of the trust property.
42(4)Subject to subsection (5), the trustees of a charitable trust may adopt a total return investment policy with respect to trust property, whether or not the terms of the trust contain a direction or authorization to that effect.
42(5)A total return investment policy may not be adopted under subsection (4) if, in the trust instrument, the settlor expressly directs the trustees not to adopt a total return investment policy with respect to that trust property.
42(6)If a total return investment policy is adopted, the trustees shall determine the net value of the assets at the beginning of each valuation period.
42(7)For the purposes of this section, the net value of the assets is the amount equal to the fair market value of the assets less any liabilities in relation to those assets.
42(8)If a total return investment policy is adopted, the trustees shall, in each fiscal period, pay to the persons who would otherwise be the income beneficiaries, or apply to the purposes of the trust, an amount equal to the specified percentage of the net value of the assets at the beginning of the valuation period.
42(9)The trustees shall:
(a) if possible, pay or apply the amount required under subsection (8) from income earned during the fiscal period from the investment of the assets;
(b) if the income referred to in paragraph (a) is insufficient to pay or apply the amount required under subsection (8), pay or apply an amount from capital; and
(c) if the income earned during the fiscal period from the investment of the assets exceeds the amount paid or applied under subsection (8), add the amount of the excess to the assets.
42(10)The valuation period for assets that are invested in accordance with a total return investment policy is determined as follows:
(a) the first valuation period begins
(i) on the date of the settlement, or
(ii) in the case of a testamentary trust, one year after the date of the testator’s death;
(b) the second and subsequent valuation periods begin immediately after the end of the previous valuation period;
(c) a valuation period is the shortest of the following:
(i) three years;
(ii) the period specified in the trust instrument; and
(iii) the period selected by the trustee.