When it comes to estate litigation, it is not uncommon for beneficiaries of an estate to have disputes with an estate trustee over how they manage an estate or whether the trustee is violating their fiduciary duty. These disputes can also occur between beneficiaries and the executor of an estate. Serving as an executor or a trustee is a significant responsibility, and not everyone might appreciate the obligations it carries or be able to manage those responsibilities properly. Fortunately, there are avenues that beneficiaries can pursue if they feel that a trustee is not acting within their duties. A recent decision from the Ontario Superior Court of Justice looks at how an estate trustee might act outside their responsibilities and how a beneficiary can remove them from that role.
The applicant in Letourneau v. Summers as Estate Trustee was the sole beneficiary of her son’s estate. Her other son was the estate’s trustee. The mother brought an application asking the court to remove her son as trustee.
The applicant was 82 years old when her son, Bernold, died. As Bernold did not have a spouse or children when he died, the applicant was the only person entitled to a share of his estate under the Succession Law Reform Act. Due to the applicant’s age and poor health, the applicant agreed that the respondent, her son Arnold, should act as the trustee for the estate.
The mother brought an application to the court based on serious allegations regarding Arnold’s performance as estate trustee. One of the primary points of contention was the house left behind by Bernold. The mother asked for the house to be liquidated. However, he failed to do so and told the Court that he had paid off the debts associated with the home. These included overdue property taxes, the mortgage, Bernold’s credit card debts, and improvements to the property (including a new roof).
The applicant told the Court that she was not consulted about any of these decisions and didn’t know whether Arnold’s own funds were used to pay for them or whether the funds came from the estate.
Trustee rented estate property against mother’s wishes, no documentation to account for rental payments
Arnold advised the Court that he had initially planned to purchase the home but determined he could not afford to do so. It was only at this point that he agreed to list it for sale. However, the applicant took issue with Arnold’s listing the property without her knowledge and input.
Furthermore, the applicant stated that Arnold delayed selling the home because he unilaterally decided to rent it to a friend. This was despite the applicant telling him she did not want the house rented and wished for it to be sold immediately. Much like the house improvements and estate debts, Arnold did not have any documentation to account for the rental of the house, and the applicant was unaware of where the money collected for rent ultimately went.
Regarding the property inside the house, the applicant alleged that Arnold removed everything from the home and put it into storage without providing her with any accounting of what was removed.
The Court explained that the principles it must consider when asked to remove an estate trustee are as follows:
- The Court will not lightly interfere with a testator’s choice of trustee;
- Clear evidence is required that the trustee’s removal is necessary;
- The Court’s primary consideration is the welfare of the estate or trust’s beneficiaries; and
- The estate trustee’s acts or omissions must be of such a nature as to endanger the administration of the estate or trust.
Ultimately, the applicant said she would not have agreed with Arnold acting as estate trustee if she knew the estate would be handled in such a manner. She advised the Court that she felt Arnold acted in his own interest and, as a result, she no longer trusted him to exercise his fiduciary duty to the estate. Arnold argued that any conflict that may have existed was gone since he could not purchase the home, although he acknowledged that he should provide an accounting for his time in that role.
The Court wrote that it was not necessary to determine the details of the facts the parties disagreed upon but that, in general, it believed the evidence of the applicant. It noted that Bernold did not ask for his brother to be named trustee; instead, Arnold was brought into that role following Bernold’s death. The Court further found that even just the conduct admitted to by Arnold provided sufficient evidence that his behaviour endangered the administration of the estate. The applicant’s welfare was also determined to be best served by the Court removing her son as trustee.
As a result of these findings, the Court removed Arnold as the estate trustee and replaced him with another of Bernold’s siblings.
At Derfel Estate Law, our estate litigation lawyers regularly work with clients on either side of disputes regarding an executor or trustee’s ability to perform their duties. We understand that family dynamics can often complicate these matters, and we help ensure the interests of our clients and their loved ones are protected throughout the process. Our knowledgeable team represents clients in a variety of disputes, including executor removals, passing of accounts, and Will challenges. Please contact us online or by phone at 416-847-3580 to discuss your estate litigation matter today.