CanadaCan a beneficiary challenge a trustee's investment decisions?
Yes, a beneficiary can challenge a trustee's investment decisions if the trustee failed to meet the legal standard of care or violated the trust terms.
What the Law Says
Canadian law imposes strict fiduciary obligations on trustees—especially trust companies—when managing trust assets. Two key sections of the federal Trust and Loan Companies Act set the legal baseline for investment conduct.
Trust companies in Canada are federally regulated and must follow both the terms of the trust document and applicable law when investing trust assets. This means they cannot ignore the trust’s instructions—even if those instructions seem outdated or conservative.
In addition, trust companies must meet an objective standard of prudence: they must act with the same care, skill, diligence, and judgment expected of a reasonably prudent trustee. This is not about perfect outcomes—it’s about whether the decision-making process was sound, informed, and consistent with fiduciary duty.
Statutory TextTrust company must invest fiduciary assets in accordance with the terms of the trust instrument and applicable law.
— Trust and Loan Companies Act, s. 413 — Investment standards
Statutory TextA trust company must exercise the care, skill, diligence and judgment that a reasonably prudent trustee would exercise.
— Trust and Loan Companies Act, s. 434 — Duty of care
What to Do
Review the trust document to confirm what investment powers and restrictions it contains.
Gather records of the trustee’s investment decisions, including minutes, reports, and rationale.
Consult a lawyer experienced in trust litigation to assess whether the trustee breached s. 413 or s. 434.
If appropriate, file a court application asking for an accounting, removal of the trustee, or compensation for losses.
Sources
Not legal advice. This article is general information based on publicly available sources, written for educational purposes. Laws change and individual situations vary. Consult a licensed attorney in your jurisdiction before acting on anything you read here. Last reviewed: 2026-06-08.