BOOK REVIEW

DRAFTING TRUSTS AND WILLS TRUSTS: A MODERN APPROACH

Fifth Edition

James Kessler

London, Sweet & Maxwell, 2000

The field of estate planning is experiencing a renaissance. The maturing of the baby boom generation, the increased incidence of second (and subsequent) marriages, and rising estate taxes are just some of the more prominent trends contributing to a heightened interest in estate planning.

While the perfect estate plan is arguably the simultaneity of death and insolvency, for most clients the more common plan focuses on one of two choices: a will or inter vivos planning. Common to both of these is the trust, an ancient device constantly being reshaped to meet current needs. Some of those needs include: protecting assets for children while ensuring the welfare of a second or subsequent spouse; avoiding probate costs; minimizing taxes; asset management in the event of an incapacity; and (at least in British Columbia) avoiding the Wills Variation Act.

A difficulty for many practitioners in Canada is finding a comprehensive modern reference guide to drafting trusts. There are, of course, the standard precedent texts, but these offer sample clauses without much discussion about the hows or whys of the clause or the trust deed generally. It was therefore with great interest that I seized the opportunity to review James Kessler’s Drafting Trusts and Will Trusts: A Modern Approach, the fifth edition of which was published last year by Sweet & Maxwell. Mr. Kessler is a Barrister of Lincoln’s Inn and Gray’s Inn in London, and the apparent creator of a very useful internet discussion group in England. He first published this book in 1992, and is clearly intent on keeping it as current as is humanly possible.

Upon cursory examination, many Canadian practitioners might find Drafting Trusts too focused upon foreign tax and legal issues. Certainly, there is considerable discussion and careful attention paid to such legislation as the IHTA (the Inheritance Tax Act 1984), the ICTA (Income and Corporate Taxes Act 1988), the TA (the Trustee Act 1925 or 2000), and the PPA (Perpetuities and Accumulations Act 1964), to name a few.

It is, however, well worth the little effort necessary to overlook the statutory discussions in Drafting Trusts. There are is a valuable review of the general principles and style of a well drafted trust. More importantly, there is thoughtful and complete examination of all aspects of trusts drafting, from the initial taking of instructions through to post execution considerations. Legal principles are explained in a thorough but practical manner without pedantries.

The book contains 25 chapters and a comprehensive set of precedents (in print and disk format). A few of these chapters will be of little practical interest to the Canadian practitioner (primarily Chapters 11 - 17 which discuss interest in possession trusts, accumulation and maintenance trusts, discretionary trusts and will trusts in the context of tax laws, and Chapter 24 which discusses stamp duties). Most of the first ten chapters could, however, be required reading for anyone intent on drafting trusts.

Chapters 1, 2 and 3 contain useful discussions on style, formatting and terminology (including a chart of archaic expressions and sensible replacements). Chapter 4 considers general issues surrounding beneficiaries (for example, problems arising from the separation or divorce of a beneficiary). Chapters 5 and 6 focus on the trustee, and include excellent discussions about such matters as: conflicts which can arise for trustees; exculpation of a trustee; and mandatory retirement of a trustee; powers of a trustee; protectors; and letters of wishes. Accompanying the discussion are sample clauses to illustrate the proposed solution.

Any practitioner drafting trusts should understand the rule against perpetuities, and Chapter 8 provides a good review of the law generally, with practical advice on how to draft provisions which comply with the rule. Some caution must be exercised in relying upon the proposed provisions, however, as they likely will reflect the laws of any particular provincial jurisdiction.

Chapters 9 and 10 are singularly useful, giving practical advice on everything a practitioner needs to know about the general contents of a trust (to name a few: naming the trust; backdating; identifying parties and trust property; definitions; and powers of appointment, resettlement and advancement). Reference should also be made to Chapter 23 which discusses the situs and governing laws of a trust, and Chapter 24 which deals with execution and post execution considerations. Other chapters give precedents for life insurance trusts, pension death benefits trusts, and trusts of court awarded damages.

There are drafting recommendations made by Mr. Kessler which every practitioner may not adopt (for example, the use of inclusive classes of beneficiaries, the need to give a trustee "absolute discretion", and reliance upon statutory administrative provisions). This does not detract in any way, however, from the valuable information provided in Drafting Trusts.

Mr. Kessler provides a timely reminder that a trust deed should not only meet the needs of the client but also read easily and be presentable to the eye. He has followed his own dictum in the drafting of this book. I recommend it as a valuable edition to any law library.

Here is information on how to buy James Kessler's books.

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