Becoming the trustee of an estate is a serious responsibility. In some situations, there could be a large number of people relying on your work to properly oversee the administration of the estate. It’s important to be aware of these responsibilities and how your conduct in the process of being a trustee can impact you, perhaps financially. An example of this comes from a recent decision from the Ontario Superior Court of Justice.
The plaintiff (“the trustee”)n made an application in June 2015 to be appointed as the trustee of the estate of a man who died in June 2015. Her application was challenged by the deceased’s brother (“the brother”) as well as four nieces of the deceased. Their challenge pertained to the validity of the will, signed in 2013.
At a trial in 2019 the will was determined to be valid, and the plaintiff was designated as the trustee of the estate. However, there were a number of issues which still had to be sorted out, mostly having to do with costs. The trustee sought full indemnity of $42,635. She took the position that the brother should have to pay her costs, and in the event that he does not, that the balance of the costs be paid for by the estate.
The brother, while acknowledging that he should have to pay something, stated he should not be on the hook for the full $42,000 partially because of the conduct of the trustee.
The scale of costs
The court agreed with the brother that it was reasonable for him to challenge the 2013 will in light of the discovery of two other versions of the document as well as the trustee’s mismanagement of them. As a result, the court decided that litigation and administration costs would be determined on the partial indemnity scale.
The bill of costs submitted by the trustee amounted to $31,170. However the brother was of the position that some of the fees claimed were unrelated to the administration of the estate or the litigation, arguing instead that costs should be set at $26,160. The trustee acknowledged this to a degree, and re-submitted costs of $28,140.
The court saw no need to go through every item being claimed, and set the costs at $26,000.
At this time, the brother argued that the trustee’s conduct should see her entitled to only 50% of these costs.
The court addresses the trustee’s conduct
In addressing this position, the court wrote,
“I found that (The trustee) did not exercise the diligence required of a litigant with respect to both the oral and documentary discovery process. On the basis of that lack of diligence, I draw an inference and find that, had (the trustee) fulfilled her oral and documentary obligations diligently, the action could have proceeded with greater efficiency and the expenses incurred by the parties would have been less than those actually incurred.”
As a result of this, the brother only had to pay the trustee half, or $13,000, of the $26,000 in costs. This case serves as a good example of the importance of seeking professional legal advice when going through such situations in order to avoid falling into traps that this trustee found herself in.
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.