Being named the executor or trustee of an estate is a huge responsibility requiring decisions that affect the beneficiaries of the estate. While executors and trustees might look to wrap up their responsibilities as quickly and efficiently as possible, there are many reasons why they may be faced with delays or even challenges from beneficiaries or those who were left out of a will. In a recent decision heard by the Ontario Superior Court of Justice, a trustee was faced with a motion requesting her to produce accounting records dating back years prior to her appointment as trustee.
The estate plan
The husband and wife (both now deceased) were married on New Year’s Eve 1984. It was not the first marriage for either party. The wife had three adult children of her own while the husband had four adult children. While the husband and wife maintained a close relationship with her children, they were not in contact with his children during their marriage.
The couple executed Powers of Attorney in 2006. They named each other as Attorney’s for Property and Care, with each naming the wife’s daughter (“LH”) has their alternate Attorney. The husband’s Power of Attorney allowed the wife to make gifts of his personal property to relatives so long as the estate maintained sufficient funds to properly care for him if be became incapable of doing so himself. Additionally, his will stated that if the wife survived him, she would be given the entire residue of his estate, subject to any debts. Should she predecease him, the estate would go to his children.
The husband suffered a stroke in October 2006. The stroke left the husband in need of assisted living, and he moved into a long term care facility The wife was thus called to exercise her duty as Power of Attorney. The wife arranged for his care, and in 2011 she transferred the marital home that had been held jointly with the husband to her name alone.
Questions of accounting arise
The wife died before the husband, passing away suddenly in July 2016. Her daughter, LH, acted as her Estate Trustee and became the husband’s Attorney for Property. The wife’s assets were distributed to her children. Including the value of the home, the assets were worth $1,063,674.
The husband passed away not long after, in November 2017. Following his death, his children (including the plaintiff, “TM”) received an initial estate accounting. They learned the assets in the father’s estate were worth only $35,963.21.
TM responded to this unexpected news by bringing a motion requesting a Passing of Accounts relating to the handling of the couple’s accounts while the wife had been acting as Attorney for Property. The wife had been expected to maintain records relating to her spending, but she did not do so. TM’s arguments included the following points,
- At the time of the (the wife’s) passing, (the husband) reportedly had assets of $9,965.74, whereas (the wife) had assets of $1,063,674.00.
- After (the husband’s) stroke, (the wife), as Attorney for Property, took the husband’s name off the title to their matrimonial home.
- While (the wife) acted as (the husband’s) Attorney for Property, (his) bank account appreciated at a rate in excess of $3,000 per month. Thus, presumably, during the almost ten years (the wife) acted as (the husband’s) Attorney for Property, his savings would have been in excess of $360,000 if managed in the same way.
- (The husband) was also believed to have a hobby farm with more than 100 acres of land.
Meanwhile LH’s position was that it was unfair to expect her to be able to provide accounting records for the time during which her mother acted as Attorney for Property.
The court’s analysis
The court first turned to the Province’s Substitute Decisions Act, which governs the conduct of an Attorney for Property. The court states, “An attorney is a fiduciary whose powers and duties must be exercised and performed diligently, with honesty and integrity and in good faith, for the incapable person’s benefit.” The court stated that a failure to retain receipts of cash withdrawals or expenses has failed to carry out these duties. While there is no limitation period for someone such as TM to request these, the court stated that requiring a passing of accounts at this stage would result in “a clear injustice as between the parties,” explaining that LH is not in a position to fulfill her mother’s obligations, nor would it be fair to make LH liable for mistakes made by her mother. LH had already been ordered to produce any information available, but the court would not extend any further obligations despite being sympathetic to the son’s position.
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.