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Choose Your Estate Trustee Wisely

Mervyn Estate, Re, 2020 ONSC 6989 (CanLII) http://canlii.ca/t/jbp6w

A passing of accounts application is sometimes commenced in circumstances where there is mistrust between the beneficiaries and the estate trustee about the manner in which the estate trustee handled the estate administration. Often, this is accompanied by a dispute about the amount of compensation claimed by the estate trustee.

In this regard, the decision in Mervyn Estate, Re,[1] is typical of the cases that our courts see in contested passing of accounts applications. It became evident that several factors contributed to increased distrust between the parties in this case, that led to the litigation. Some of the distrust pre-existed the estate administration, and several other issues arose during the course of the estate administration.

The deceased changed his will shortly before his death to add his second wife, as an estate trustee. There were three estate trustees.

While the objectors were provided with a copy of the will in late June 2017, it was not until the Reply to Notice of Objection to Accounts dated November 29, 2019 was filed that the estate trustees disclosed and produced a document entitled Memorandum to Bud’s Will which provided that the contents of the home and the deceased’s personal possessions not otherwise dealt with in the will should be delivered to Anne (2nd wife/estate trustee).  Prior to the disclosure, and in the absence of voluntary evidence to support actions taken by the estate trustees during the administration of the estate, there had been valid grounds for filing an objection on the basis that certain assets had been sold with the proceeds going to Anne and certain assets having been gifted by Anne.

One of the deceased’s sons, Jason, claimed he was the owner of two rifles that the deceased had in his possession. However, the estate trustees took the position that the deceased owned them.  The dispute over the rifles led to Jason reporting to the OPP that the rifles had been stolen. The list of issues between the parties continued.

Background 

The deceased, Mervin Bud (“Bud”) died on June 13, 2017. He appointed his second wife, Anne, his long-time employee, and his daughter, Cindy, as estate trustees of his will. Notices of Objection were filed by Bud’s sons, Jason and Michael.  Prior to Bud’s death, the sons’ relationship with Anne and their sister was already strained.

Position of the Objectors

The objectors’ set out their objections as follows:

  • The Estate Trustees did not administer the Estate competently and their compensation should be reduced.  The compensation should also be reduced as the lawyer representing the Estate Trustees did work that the Estate Trustees should have done themselves.
  • The Estate consisted primarily of real estate and was not complex so the claimed yearly management fee should be disallowed.
  • Anne did little or no work as Estate Trustee so the payment to her should be eliminated or reduced.
  • The Estate Trustees improperly paid certain expenses related to the family home that should have been paid by Anne.
  • The Estate Trustees should be personally responsible for the costs of the Objectors.
  • Jason is the owner of the two rifles in Bud’s possession.

The court reviewed each of the objectors’ complaints and the evidence put forth by the parties and found little to no fault with the Estate administration.

The Court found that “the Estate Trustees were overseeing matters and it is not unusual for a law firm to be involved taking the steps necessary to convert assets to cash, pay expenses and ensure that taxes are paid”.[2] Except for the management fee which the judge felt should be disallowed given that the Estate, consisted almost entirely of real estate, required little management[3] and that the two rifles belonged to Jason. The court dismissed the remainder of the objections.

Takeaway

Testators’ should give careful consideration as to the appropriateness of the appointment of their estate trustee in order to minimize or alleviate any feelings of mistrust or any chance of a dispute arising during the course of the administration of their estate. Many factors should be considered, including whether there exists a strained relationship between the would be estate trustees and the beneficiaries as this may determine how the estate trustees and beneficiaries choose to interact, or fail to interact, during the administration of the estate, which could ultimately lead to an invitation to litigation.

[1] 2020 ONSC 6989 (CanLII), http://canlii.ca/t/jbp6w

[2] At para 17 of Mervyn Estate

[3] Archibald Estate, Re, [2007] O.J. No. 2390 (S.C.J.), paragraphs 20-24, which explain that care and management fees should not routinely be awarded

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