If you are a beneficiary under a Will, what can you do if you are unhappy with the actions that the Estate Trustee has taken? How do you remove an Estate Trustee?
In a Will, the testator appoints someone to be their estate trustee to administer their assets upon their death. After the testator has died, the estate trustee is their personal representative. The estate trustee is the person who stands in the shoes of the testator and exercises the testator’s rights and fulfills the testator’s obligations. The role of the estate trustee is to settle the debts and administer the property of the estate. Once those tasks are finished, the role of the estate trustee is complete. However, there are only minimal restrictions on who can be appointed as estate trustee. Those restrictions are that the individual must be at least 18 years of age and mentally capable.
What happens if the testator does not make the best choice in who they have named as estate trustee? As a beneficiary, is it possible to change the estate trustee?
In the decision of Virk v. Brar Estate, the court had to decide whether to remove the estate trustee from his role, due to questionable actions he undertook and animosity with the testator’s former wife. In Brar Estate, the beneficiaries believed the estate trustee’s lack of communication and notice to the former spouse, the estate trustee’s animosity and his breach of a trust amounted to a level where court intervention was necessary. Ultimately, however, the Court did not grant the application that was brought by the beneficiaries to remove the estate trustee.
While the interests of beneficiaries are important, the fact that a testator has named in his Will who should be estate trustee is a very crucial consideration. The courts will ensure that the testator’s wishes in naming an estate trustee are to be upheld in the same manner as their wishes in the distribution of assets.
However, the Brar Estate decision does not leave the beneficiaries powerless. In a January 2017 decision in Laski v Gallo, the court exercised its power under section 5 of the Trustee Act, which provides that the Superior Court of Justice may make an order to appoint a new estate trustee (or estate trustees) either in substitution for or in addition to the existing estate trustees. In Laski, the deceased died in July 2010 and left his estate to be divided equally between his three children. The deceased appointed one of his daughters as the estate trustee. In 2010, the estate trustee sold the deceased’s house for $134,000 but did not distribute the sale proceeds to her siblings. Six years after the deceased died, one of the beneficiaries brought an application to remove the estate trustee. By the time the application was heard in court, the beneficiaries learned that approximately $60,000 of the funds in the estate bank account had been spent. The estate trustee was not able to provide an accounting for the estate assets from the date of the deceased’s death to account for the missing funds, and explained to the court that she had conducted several transactions with her sister’s husband and had lost everything as a result. Also, the estate trustee submitted that the majority of the estate should be distributed to her (despite what the Will stated) because she had provided care to the deceased for several years prior to his death.
Although the courts are generally reluctant to interfere with a testator’s intentions when a testator appoints an estate trustee in their Will, in this case, the court found that it was in the best interest of all the beneficiaries to replace the estate trustee. The courts will not ignore clear evidence of an estate trustee’s breach of their fiduciary duties.
Renunciation, and removal of Estate Trustee
In a Court of Appeal decision of Chambers Estate v Chambers, the court dealt with the concept of removing an estate trustee as opposed to the resignation of an estate trustee.
Under the facts of this case, the deceased Mr. Chambers executed two Wills. The first Will disposed of all of Mr. Chambers’ assets, except for shares in private corporations that he owned at the time of his death. In the second Will, Mr. Chambers disposed of the shares. Michael Chambers, the son of the deceased, brought an application to be appointed as co-estate trustee with a trust company. Mrs. Chambers, the deceased widow, brought an application to be removed as the estate trustee.
The court had to answer the following questions:
- When can an estate trustee renounce?
- When can an estate trustee be removed? or
- When can a person be passed over as estate trustee?
The person who is named as estate trustee in a Will can renounce the appointment of being named estate trustee under a Certificate of Appointment before the Certificate of Appointment has been obtained or before the person has dealt with any of the estate assets.
Once a person has begun to act as estate trustee or has received a certificate of Appointment naming them as estate trustee, rule 75.04 of the Ontario Rules of Civil Procedure is the authority for the court to revoke the Certificate of Appointment of estate trustee. Also, section 3 of the Trustee Act provides that if a estate trustee dies or remains outside of Ontario for more than twelve months or wants to be removed as estate trustee, the estate trustee can bring an application before the Superior Court of Justice to be removed and have another person or trust company appointed as a replacement estate trustee. As part of their resignation, the estate trustee will have to provide an accounting to the beneficiaries of the estate assets and outline what tasks are left to be completed for the administration of the estate.
If you are a beneficiary and you are not happy with the work that is being done by the estate trustee, you should seek a legal opinion to determine if the actions of the estate trustee are sufficient to compel the courts to remove the estate trustee from their job.
Marcia A. Green is an associate lawyer with the Ottawa law firm of Nelligan O’Brien Payne LLP (www.nelligan.ca) and a member of the Wills and Estates Practice Group.
This article originally appeared in Fifty-Five Plus Magazine in May 2017.