Having a valid will in place at the time of one’s death is incredibly important. Naming a trusted individual or individuals to act as executor of the estate is just as important, as this role carries a great degree of responsibility.
In the recent decision of Humphreys-Saude v. Pavao, a mother was named as executor of her son’s estate, however, the testator’s daughter accused the family of improperly spending money from the estate and failing to distribute it in accordance with her father’s will.
The testator in this case passed away in November 2019. At the time of his death, he lived in an apartment which he rented with his elderly mother, who he appointed as the executor of his estate. The testator was survived by my mother, his sister (the “respondent”), and his daughter. The testator was described as a man with “modest means”, though he won $77,777 through an instant lottery in 2019.
In his will, the testator left the entirety of his estate to his daughter, the primary asset of which was his bank account which had a balance of approximately $57,548 at the date of his death. However, at the time the parties went to trial, the bank account had a remaining balance of $37,249. The $20,000 which had been depleted was the subject of the dispute between the parties.
The testator’s daughter told the court that she had discovered that she had been named the sole beneficiary of her father’s estate from someone other than the executor. However, when she sought further information about the details of the estate, she was told by the executor that she “would not disclose anything.”
The daughter retained a lawyer to help her obtain information regarding her father’s estate. After weeks of negotiations, a statement for the father’s bank account was obtained, however, the statement showed that $20,000 had been withdrawn from the account after her father’s passing. At this time, the bank account was not frozen as the executor had not advised the bank that the testator had died.
When asked where the money had gone, the testator provided a list of expenses she insisted that the estate had incurred, including a $10,000 debt to the testator. The testator also wrote a note with the accounting statement that said “The day (the testator) died the police confiscated his cell phone cash and a bag of white powder, maybe you should go to the police to get it back so you can sell it.”
After reviewing the accounting and the note, the testator’s daughter took steps to successfully install her mother as the new estate trustee. With the new trustee in place, a subsequent review of the bank records showed that a total of $13,300 had been withdrawn over a series of 16 transactions since the testator’s death.
Additionally, the debit card tied to the account had been used 24 times between December 2, 2019 and January 10, 2020 to make a total of $6,559.09 in purchases.
Further, a CPP death benefit cheque of $2,500 was issued to the estate and deposited into an account owned by the executor.
The Court found that the accounting provided by the respondent and executor was insufficient and confirmed that there was no documentation which provided justification for the cash withdrawals made from the account, or the alleged $10,000 debt to the testator’s mother.
By the time the parties went to trial, the executor had passed away, and the respondent told the court that she had nothing to do with the estate management. However, the Court found that she had routinely driven the executor to the bank and was aware that the executor was using the testator’s bank card to withdraw cash and make purchases. In response, the respondent stated that she was acting on the instruction of the executor and did not spend any of the money herself.
The court found that the respondent was liable for the funds which had been spent between the testator’s death and trial. The respondent was considered a “stranger to the trust,” meaning that she had no official role in the estate, either as a beneficiary or an executor.
There are three ways in which a stranger to a trust may be found liable for a breach of the trust. The first is a doctrine known as a “trustee de son tort” which states that “a stranger to the trust may be liable for breach of trust where the stranger takes it upon herself to act as a trustee and to possess and administer trust property if she commits a breach of trust while so acting.” The second is through “knowing assistance” in which a stranger to the trust assists someone in the mismanagement of it. Finally, a stranger to a trust may be held liable if they knowingly receive trust property improperly.
In this case, the respondent was found to be liable for knowing assistance due to her knowledge of the trust relationship as well as a breach of that trust. The court found that the respondent and the estate of the testator’s mother were jointly and severally responsible to the applicant with each being found to be liable for an amount just over $12,000. The court found that the estate of the testator’s mother was also responsible to the applicant for further debit purchases made after the death of the testator.
At Derfel Estate Law, our team of estate lawyers have experience in providing skilled advocacy for clients involved in a variety of estate and trust disputes, including Will challenges and issues related to executors or trustees. Please don’t hesitate to contact us if you think an estate to which you are a party is being mismanaged. We are conveniently located in Toronto and proudly serve clients throughout the Greater Toronto Area and Ontario. To schedule a confidential consultation, contact us online or by phone at 416-847-3580.