Estate trustees are entitled to compensation for their work on an estate. Estate trustees may also hire professionals to assist when appropriate, i.e. lawyers or accountants. However, an estate trustee cannot be compensated for estate trustee work that they choose to pass on to a lawyer or other professional to complete, instead of undertaking themselves. This is what the beneficiaries objected to in Elines v. Ollikainen, 2017 ONSC 1576 on a passing of accounts application.
The estate trustee, a niece of the deceased, was seeking $45,034.82 in compensation based on the accepted percentages for estates of average complexity. At the time of death the value of the estate was approximately two million dollars. The estate trustee had retained legal counsel, a tax preparation service, and a chartered professional accountant to prepare the accounts for passing. Certain beneficiaries objected to the amount of compensation sought by the trustee suggesting that legal and accounting fees incurred by her ought to offset any compensation claim.
There were 16 invoices from the estate solicitor’s law firm contained in the vouchers (the documentation of the accounts) over the period of January 24, 2013 to January 28, 2016. Some of the invoices contained accounts arrived at by reason of hours spent by the solicitor, but no description was provided for the work done by the solicitor. Typically the invoices stated: “To our fee for professional services ……. Unfortunately, the accounts were not detailed. No determination could be made as to whether this was solicitor’s work ordinarily required by an estate trustee or simply the work of the estate trustee delegated to the solicitor.
The onus of satisfying a court that the legal accounts do not cover work that is properly the responsibility of the estate trustee rests with the estate trustee. The Court relied on Re Watterworth Estate 1995 OJ No. 2272 and cited Fleury J. that:
“It is clear law that where solicitors perform executors work, the estate cannot be charged for these services from two separate sources. Where the work being done by the solicitors is truly solicitors work, that is a legitimate disbursement of the estate and cannot be criticized. . .Since the accounts did not differentiate between the functions of the executors and those of the solicitors, it was entirely appropriate for the executors in this case to pay the entire amount as and when due. It will be left to me to determine if any portion of these accounts should have been paid out of the executor’s compensation.”
The estate trustee argued that these were necessary legal expenses incurred by her in connection with the administration of the estate. However, no affidavit evidence was filed by the solicitor and the evidence of the estate trustee at this hearing was “of no help in assisting the court in determining whether she met this onus”.
The Court accepted the beneficiaries’ submission and $37,512.57 of the legal fees were deducted from the estate trustee’s compensation.
The tax preparer’s expense however was determined to be a necessary expense of the estate, given the size of the estate and the nature of the assets under management. No further deduction from the executor’s compensation was made.
Joint Bank Account
A final issue decided on this case was also a joint account the estate trustee had with the deceased. The beneficiaries argued it formed part of the estate.
The deceased had opened the joint account without the estate trustee being present, with a co-applicant form with a clause “your account will be joint with right of survivorship unless the following is ticked: no right of survivorship”. That box was not ticked off.
The estate trustee gave evidence that she had access to the account to pay the deceased’s expenses. The account received deposits by way of CPP, OAS, and other pension income. She said the deceased had said to her: “There isn’t that much in the account, you have it”.
However, the balance in the account at the time of death was close to $25,000.00, and a deposit of $8,000 was made into it a few days after her death. While the estate trustee testified that she too made deposits into the account, no banking statements were filed with respect to the activity in the account to show how the sum of $25,000 was arrived at or if any withdrawals were made to pay the deceased’s bills. The Court concluded that based on Pecore v. Pecore 2007 SCC 17 that a presumption of resulting trust was created and that on the following facts the estate trustee could not rebut the presumption and show that the deceased had intended to gift the funds to her niece:
- No evidence there was any money in the account when it was opened or that payments of the deceased’s bills were ever made from the account;
- The deceased likely anticipated only a small amount would be left in the account after deposits and disbursements; however, there was no evidence that any disbursements ever took place; and
- The estate trustee was also the attorney under a POA for property and therefor was in a position to pay the bills from other accounts leaving this account to accumulate the deposits.
The joint account formed part of the residue of the estate and was to be divided in accordance with the Will.
An estate trustee has the onus of proving legal fees are reasonably incurred.