An estate trustee is often called by the more traditional name of executor (male) or executrix (female). Their role is to carry out the terms of the last will and testament of the testator (the person who made the will). Estate trustees can be left with significant responsibilities in relation to the testator’s estate. Because their role is carried out after the individual has already passed away, the estate trustee’s relationship to the estate is characterized by a high degree of trust. This type of relationship is called a fiduciary relationship.
In Canadian law, the word fiduciary is often used to distinguish something as a special relationship. These relationships are common in Canada and some of the most prominent examples are the relationship between parent and child, corporate director to corporation, and business partner to business partner. Fiduciary law is a large area of law that covers topics ranging from aboriginal rights to corporate law. Within the estate planning context, a fiduciary relationship exists between estate trustee and the estate itself. The estate trustee is important in carrying out the final wishes of the deceased. For this reason, the law takes any breach of a trustee’s responsibilities very seriously.
Two cases from the Ontario Superior Court of Justice illustrate how the court is willing to punish rogue trustees that fall below the high standard the law sets. In Zimmerman v McMichael Estate[i], the estate trustee, Adam Zimmerman, used the estate of the late McMichael’s (of The McMichael Art Gallery) as a personal bank account. He depleted the estate of millions of dollars through questionable expense claims. Mr. Zimmerman repeatedly failed to keep proper records for his expense. Nor could he provide sufficient answers to questions concerning expenses billed for steak dinners, men’s clothing and sailing trips in Bermuda. His conduct fell well below the standard that a trustee owes. Therefore, Mr. Zimmerman was not owed any compensation for his time as trustee and he was required to repay nearly a million dollars to the estate as well as all the legal costs.
In The Estate of Paul Penna[ii], Barry Landen showed a similar level of neglect for his duties as estate trustee. He was eventually sentenced to 14 months incarceration for contempt of court. The saga began soon after the death of Paul Penna, who left Mr. Landen in charge of his $24,000,000 estate. Mr. Landen used the money to finance a lavish lifestyle complete with a house in Forest Hill and season tickets to the Toronto Maple Leafs. When his deceit was exposed he repeatedly refused to comply with court orders designed to protect the estate’s assets. Justice Greer eventually found Mr. Landen in contempt of court and ordered that he be imprisoned for 14 months.
The court in these two cases sent a stern warning to estate trustees and anyone owing a fiduciary duty. At all times, they must ensure that:
They carry out their duties with honesty and due care and attention.
They personally carry out the responsibilities which have been delegated to them
They ensure that they do not have a conflicting interest with their duties
They are not obligated to be perfect but they must act in the best interest of their beneficiaries. Failure to do so can result in strict punishments.
If you have a question about an estate trustee, rogue fiduciaries or the responsibilities of an executor, contact Dale Streiman Law LLP. They have decades of experience that makes them experts in all facets of estate law.
[i] Zimmerman v McMichael Estate, http://canlii.org/en/on/onsc/doc/2010/2010onsc2947/2010onsc2947.html
[ii] The Estate of Paul Penna, http://canlii.org/en/on/onsc/doc/2010/2010onsc4730/2010onsc4730.html