Trustee Liability and a Devastavit: A Primer
Where an estate trustee is found to have mismanaged, misapplied, squandered or neglected assets of an estate, they are said to have committed a ‘devastavit’.[1] If one can prove there are insufficient assets in the estate to satisfy its debts because of mismanagement, the estate trustee may be held personally liable. Common examples of a devastavit include paying legacies where there are insufficient funds for creditors or making poor investments which result in a loss to the estate.
It is worth noting that an estate trustee will not typically be held liable where the loss of assets occurs through accident or honest mistake. The estate trustee is only charged with meeting their standard of care, which is described in Widdifield on Executors and Trustees[2] as follows:
The law requires that the trustee turn his mind to his various tasks and exhibit the same degree of diligence in the exercise of his discretion as would be expected from a man of ordinary prudence in the management of his own affairs. The test is whether “a reasonable and honest man might have come to the same conclusion rather than whether the judge would have handled the matter otherwise.[3]
Most Canadian provinces have enacted legislation to provide the court with discretion to relieve a trustee from personal liability arising from improper dealing with trust property. This is no different in Ontario, where section 35 of the Trustee Act[4] provides as follows:
Relief of trustees committing technical breach of trust
35 (1) If in any proceeding affecting a trustee or trust property it appears to the court that a trustee, or that any person who may be held to be fiduciarily responsible as a trustee, is or may be personally liable for any breach of trust whenever the transaction alleged or found to be a breach of trust occurred, but has acted honestly and reasonably, and ought fairly to be excused for the breach of trust, and for omitting to obtain the directions of the court in the matter in which the trustee committed the breach, the court may relieve the trustee either wholly or partly from personal liability for the same. R.S.O. 1990, c. T.23, s. 35.[5]
Accordingly, the Trustee Act permits a judge to excuse an estate trustee for breach of trust where it is demonstrated that they: (1) acted honestly, (2) acted reasonably, and (3) ought to be fairly excused.[6]
Whether a trustee has acted honestly and reasonably will depend on the facts of the particular case. In The Law of Trusts,[7] Justice Gillese notes that:
“Generally, the courts have interpreted ‘honestly’ as an active involvement in the affairs and decisions of the trust administration.” Whether a trustee’s conduct is “reasonable” is generally determined on the basis of what an ordinary prudent business person would have done in the circumstances.[8]
Moreover, courts are to consider a trustee’s breach of trust in the light of all of the circumstances. The relevant factors will include whether the breach was technical in nature or a minor error in judgment; whether the trustee was paid; and whether the trustee is a professional.[9]
In Cahill v. Cahill,[10] the Ontario Court of Appeal (“ONCA”) considered an estate trustee advancing section 35 of the Trustee Act. In this case, an estate trustee was obligated to set up a trust fund for a beneficiary pursuant to a Last Will and Testament. They subsequently failed to do so, mismanaging the principal which resulted in a significant loss to the estate.[11]
The ONCA dismissed the estate trustee’s appeal, upholding the lower court’s decision which found that, while she acted honestly, she did not act reasonably and therefore should not be excused. In this regard, the estate trustee was ordered to personally pay the amount of $80,000, being the outstanding principal necessary to fund the trust pursuant to the Deceased’s Will.[12]
Concluding Comments
Estate trustees may be held personally liable for falling below their expected standard of care. Whereas Ontario’s Trustee Act provides a mechanism for trustees to be excused from personal liability for breach of trust or a devastavit, it is incumbent for them to demonstrate they acted both honestly and reasonably.
—
[1] Feeney’s Canadian Law on Wills (4th ed, LexisNexis Butterworths, 2024) at 8.56.
[2] Widdifield on Executors and Trustees, (6th edition); citing Learoyd v. Whiteley (1887), 12 App. Cas. 727 (U.K. H.L.); Tabor v. Brooks (1878), 10 Ch.D.273 (Eng. Ch. Div.); Bell, Re (1923), 23 O.W.N. 698 (Ont. H.C.).
[3] Ibid. at 2.3.
[4] Trustee Act, R.S.O. 1990, c. T.23.
[5] Ibid. at section 35(1).
[6] Cahill v. Cahill, 2016 ONCA 962 (CanLII) (“Cahill”) at para 50.
[7] The Law of Trusts (3rd ed, Irwin Law, 2014).
[8] Ibid. page 190.
[9] Cahill at para 52.
[10] (supra note 9).
[11] Cahill at paras 5, 7 and 9.
[12] Cahill at paras 45, 54 and 56.
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Written by: Oliver O'Brien
Posted on: September 10, 2025
Categories: Commentary
Where an estate trustee is found to have mismanaged, misapplied, squandered or neglected assets of an estate, they are said to have committed a ‘devastavit’.[1] If one can prove there are insufficient assets in the estate to satisfy its debts because of mismanagement, the estate trustee may be held personally liable. Common examples of a devastavit include paying legacies where there are insufficient funds for creditors or making poor investments which result in a loss to the estate.
It is worth noting that an estate trustee will not typically be held liable where the loss of assets occurs through accident or honest mistake. The estate trustee is only charged with meeting their standard of care, which is described in Widdifield on Executors and Trustees[2] as follows:
The law requires that the trustee turn his mind to his various tasks and exhibit the same degree of diligence in the exercise of his discretion as would be expected from a man of ordinary prudence in the management of his own affairs. The test is whether “a reasonable and honest man might have come to the same conclusion rather than whether the judge would have handled the matter otherwise.[3]
Most Canadian provinces have enacted legislation to provide the court with discretion to relieve a trustee from personal liability arising from improper dealing with trust property. This is no different in Ontario, where section 35 of the Trustee Act[4] provides as follows:
Relief of trustees committing technical breach of trust
35 (1) If in any proceeding affecting a trustee or trust property it appears to the court that a trustee, or that any person who may be held to be fiduciarily responsible as a trustee, is or may be personally liable for any breach of trust whenever the transaction alleged or found to be a breach of trust occurred, but has acted honestly and reasonably, and ought fairly to be excused for the breach of trust, and for omitting to obtain the directions of the court in the matter in which the trustee committed the breach, the court may relieve the trustee either wholly or partly from personal liability for the same. R.S.O. 1990, c. T.23, s. 35.[5]
Accordingly, the Trustee Act permits a judge to excuse an estate trustee for breach of trust where it is demonstrated that they: (1) acted honestly, (2) acted reasonably, and (3) ought to be fairly excused.[6]
Whether a trustee has acted honestly and reasonably will depend on the facts of the particular case. In The Law of Trusts,[7] Justice Gillese notes that:
“Generally, the courts have interpreted ‘honestly’ as an active involvement in the affairs and decisions of the trust administration.” Whether a trustee’s conduct is “reasonable” is generally determined on the basis of what an ordinary prudent business person would have done in the circumstances.[8]
Moreover, courts are to consider a trustee’s breach of trust in the light of all of the circumstances. The relevant factors will include whether the breach was technical in nature or a minor error in judgment; whether the trustee was paid; and whether the trustee is a professional.[9]
In Cahill v. Cahill,[10] the Ontario Court of Appeal (“ONCA”) considered an estate trustee advancing section 35 of the Trustee Act. In this case, an estate trustee was obligated to set up a trust fund for a beneficiary pursuant to a Last Will and Testament. They subsequently failed to do so, mismanaging the principal which resulted in a significant loss to the estate.[11]
The ONCA dismissed the estate trustee’s appeal, upholding the lower court’s decision which found that, while she acted honestly, she did not act reasonably and therefore should not be excused. In this regard, the estate trustee was ordered to personally pay the amount of $80,000, being the outstanding principal necessary to fund the trust pursuant to the Deceased’s Will.[12]
Concluding Comments
Estate trustees may be held personally liable for falling below their expected standard of care. Whereas Ontario’s Trustee Act provides a mechanism for trustees to be excused from personal liability for breach of trust or a devastavit, it is incumbent for them to demonstrate they acted both honestly and reasonably.
—
[1] Feeney’s Canadian Law on Wills (4th ed, LexisNexis Butterworths, 2024) at 8.56.
[2] Widdifield on Executors and Trustees, (6th edition); citing Learoyd v. Whiteley (1887), 12 App. Cas. 727 (U.K. H.L.); Tabor v. Brooks (1878), 10 Ch.D.273 (Eng. Ch. Div.); Bell, Re (1923), 23 O.W.N. 698 (Ont. H.C.).
[3] Ibid. at 2.3.
[4] Trustee Act, R.S.O. 1990, c. T.23.
[5] Ibid. at section 35(1).
[6] Cahill v. Cahill, 2016 ONCA 962 (CanLII) (“Cahill”) at para 50.
[7] The Law of Trusts (3rd ed, Irwin Law, 2014).
[8] Ibid. page 190.
[9] Cahill at para 52.
[10] (supra note 9).
[11] Cahill at paras 5, 7 and 9.
[12] Cahill at paras 45, 54 and 56.
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