What's the "Even Hand Rule"...and When Might it Apply?
When discussing a trustee’s obligations, the duty to be “even handed” is often mentioned. However, it’s not always clear what the duty entails.
The even hand rule is sometimes described as an executor or trustee’s obligation to treat all the beneficiaries of an estate/trust equally. However, this isn’t quite accurate – sometimes, under a will/trust, beneficiaries will have different types of interests (e.g. one beneficiary receives a car, the other beneficiary receives the residue of the estate) – and the nature of those interests might dictate differential treatment.
A trustee’s duty to be even handed is perhaps better described as the duty to ensure that: (1) the beneficiaries receive what they are entitled to under the terms of the will/trust; (2) one beneficiary does not receive an advantage or bear a burden that other beneficiaries with the same interest do not receive/bear; and (3) the trustee is acting impartially.
A trustee’s obligation to be even handed can be effected by the terms of the will/trust. There are some situations where a trustee might be given discretion to prefer the interests of one beneficiary to the expense of others (such as when there’s a testamentary trust and the trustee has the discretion to pay capital of the trust to the benefit of an income beneficiary).
Still, even when a trustee has certain discretions, the even hand rule might nevertheless apply. Cullity J’s decision in Edell v. Sitzer includes a very helpful discussion of the impact that discretionary powers have on the even hand rule.
There are also situations where the terms of a will (or trust) are such that the trustee’s obligation to be evenhanded is completely ousted. Pattillo J’s recent decision in the Primo Poloniato Grandchildren’s Trust is an example of when that might occur.
In any event, the application and scope of the even hand rule is complex and can often cause confusion. A trustee who is concerned about her obligations in this regard is strongly advised to seek advice – making a wrong decision can result in personal liabilty on the part of the trustee.
Comments (2)
Read through and enter the discussion by using the form at the endLee Douglas - March 10, 2011 5:01 PM
Great site Megan. I'm articling in Sask. and working on an Estate File. I came across the issue of making an "in specie distribution" of assets between beneficiares, and needed to know what this "even handed rule" was all about. I googled it and here I am. Very good explaination. Thanx. Lee.
Judy Cherlon - June 18, 2011 3:03 PM
I'm in the process if deciding whether I should take legal action regarding my fathers estate. My father gave his lawyer specific instructions regarding the distribution of his business. The lawyer is acting as the trustee. My father met with him on many many occasions whereby I was present each and every time and was privy to all discussions and all instructions my father gave his lawyer. My father passed on January, 2011. When we met with lawyer to read will, there was no indication whatsoever that any instructions were carried through. I was also at the meeting whereby my father signed his will. The lawyer did not explain to my father what in fact his will said. Although my father was completely of sound mind, he was extremely phisically will and no longer had the capacity to question or read the will he was signing. My father put 100% trust in his lawyer and depended on him to represent him in his death. I have known this lawyer for 15 years. While my father was alive, he represented himself one way. After my fathers death, he is showing a side of him that is more then disturbing. I feel the need to stand up for my father and do for my father whatever is necessary in order for his last wishes to be carried through.