Estate Complications with Estate Trustees

Date: 17 Oct, 2018

Sometimes, third parties who are not related to the deceased may be appointed by the court as an estate trustee.

It has been our experience in highly contested estates when competing parties will not agree on permitting the other acting as estate trustee, the court has the ability to appoint a third party.

On consent, we have even had the situation where a solicitor in our office has been appointed as an estate trustee during litigation.

An example set out in the Taylor Estate decision was a fight between appointed executors/siblings. The Court held that the situation was obviously unworkable, due to the conflict between the siblings.

The court selected and appointed a mutual agreed third party.

Under the Estates Act, a named executor has the ability to nominate a third party to act as estate trustee which can be successful with the court’s authority.

One has to be careful in not looking to a third party who resides outside of Ontario. Looking at S.6 & 29 of the Estates Act, the court can only appoint an estate trustee with a will to a non-resident of Ontario who has the consent of the majority of the persons living in Ontario who otherwise are entitled to apply for such an appointment.

Clearly, there is a considerable expense in having an outside party so appointed as they rarely will act unless they are paid to do so.

This leads back to the author’s own prejudice against naming multiple executors. It is a recipe to create conflict when none is necessary. As we discussed elsewhere, testators often wish to name all of their children as joint executors as an expression of their equal love for them. This is a failed logic for that love should be expressed in the naming of the equal beneficiaries rather than the complication of multiple executors.

Estate Trustee, Civil Procedure and Punitive Damages: The Power of the Courts to do More than they Were Asked For

Date: 06 Mar, 2014

In a previous blog post[1], I discussed the role of estate trustees and the consequences they face when they fail to live up to their fiduciary duty. The estate trustee is responsible for carrying out the last wishes of a person who died. Their fiduciary duty imposes responsibilities to look after the estate in a trust worthy manner with an eye to the interests of the beneficiaries. This is even more important when the estate trustee is looking after the estate for the benefit of children. This is the scenario that existed in Walling v Walling where the deceased appointed his brother as trustee over his estate. The deceased’s sons were minors at the time, therefore the will required the estate trustee to look after the estate until the youngest boy reached 21, at which point the trustee was obligated to turn over the estate to the boys. Unfortunately, this never happened and the children were forced to bring legal action to recover their father’s estate.

This case is important because it highlights the court’s power to impose significant penalties, even penalties that go beyond what the plaintiff is asking for, when the facts demand it. Punitive damages are a special type of money award that the courts can give. Typically, damages are awarded for specific harm, punitive damages are different though. They are designed as a punishment for conduct that the court deems particularly offensive to society. Their use is fairly rare in Canada but they will be used when the facts show a clear need.

This case warranted punitive damages because the trustee was exclusively responsible for a severe harm done to the children. By denying them their inheritances, the estate trustee made it difficult financially and limited their post secondary education opportunities. Furthermore, the trustees actions in excluding the children from their father’s funeral and denying them any significant sentimental mementos were particularly offensive. He was in a position of power and trust and he broke that trust to exploit the vulnerable children. The judge looked at the facts and award $100,000 in punitive damages. This was double the amount requested by the boys. The judge said it was warranted because a lower award would not properly reflect the court’s abhorrence of this type of conduct. Additionally, the judge was to use this award as a clear deterrent to others who may try similar actions in the future.

In litigation, there are rarely any certainties about the outcome the judge will provide. The court’s focus is upon justice and the judge’s decision will bear that in mind. In situations where a judge thinks a large amount is required they can go beyond what the parties have requested. Doubling punative damages in this case was warranted because of the specific effects that the estate’s actions had upon the children. This is certainly a rare occurrence, but it happens with enough regularity that people should take note of it.

The lawyers at Dale Streiman Law have practiced estate litigation for decades and are experts in all facets of estates law. They can help resolve any estate disputes in a timely and cost effective manner.