Being named executor of an estate comes with a lot of responsibility. Not only is the executor responsible for the administration and distribution of the estate, but the role also opens them up to the possibility of personal liability. For this and other reasons, executors are generally entitled to compensation equal generally to about 5% of the value of the estate. But what about when the executor breaches their duties when working on behalf of the estate? That’s an issue the court recently had to address in a decision from the Supreme Court of British Columbia.

Estate is gifted to one individual

The deceased passed away in December 2015. His will, which was signed in 2014, provided that his entire estate should be given to a friend, “NB,” who resides in Croatia.

The executors were a husband (“VP”) and wife (“HP”), who were also friends with the deceased. HP was a registered nurse who provided living assistance to the deceased for a period of time leading up to his death.

A passing of accounts was ordered in June 2019. During this process, the fees claimed by the executors were contested. The fees were:

537. a) A notary bill in the amount of $4,537.27;

538. b) The cost of taking the deceased’s ashes to Croatia in the amount of $11,525.01;

539. c) The executor’s care giving expenses claimed in the amount of $36,300; and

540. d) Legal bills in the amount of $19,158.95, which were not included in the Statement of Accounts affidavit, but are claimed on this passing of accounts.

NB contested the fees on a number of grounds. She said some of the legal fees resulted from an attempt by the executors to sell the deceased’s home to their daughter for roughly 50% of market value. They also said the costs for the trip to Croatia should be denied since it ultimately amounted to a vacation for the executors. And finally, NB said that the alleged care giving expenses were exaggerated and unproven.

Did the executors breach their fiduciary duty?

The executors admitted that they attempted to sell the deceased’s house to their daughter for about 50% of its market value. The sale was only stopped because NB brought a legal action to prevent it from taking place. In addition to that, they also loaned their daughter $13,000 from the estate in order to raise money for the home’s purchase.

The executors said that while they did try to sell the home to their daughter, they did so acting on the advice of others, including a notary. They said they have little experience in real estate.

The court found that the attempted property sale was an “egregious breach of their fiduciary duty,” and that if they were successful in the sale, the estate would have been reduced by 50% in value. Breaches of trust can be excused if the executors acted honestly and reasonably, but the court stated this was not such a situation.

As a result, the court reduced their remuneration to $0, but did provide $5,762.50 for the trip to Croatia, $27,000 for care giving expenses, and $7,000 for legal fees.

If you are the friend or family member of a testator and are concerned about the appointed trustee or executor, contact Derfel Estate Law. Our Toronto estates lawyers help clients ensure that their interests or the interests of their loved ones are protected, and decisions are being made in the best interests of the estate. Call us at 416-847-3580 or contact us online to schedule a consultation.