Who controls the assets of an estate during litigation?
When a will challenge is commenced, one of the often overlooked consequences of the proceeding is that there is now no individual with the inherent authority to administer the estate. By challenging the validity of the will, the proceeding is by its very nature challenging the authority of the individual named as Estate Trustee in the will, leaving no one with the authority to properly safeguard the assets of the estate. Estates cannot be administered in a vacuum, and their assets do not simply sit idly by waiting the litigation to conclude. When no individual has the inherent authority to collect and maintain the assets of an estate as a result of litigation, the court may appoint an Estate Trustee During Litigation (“ETDL”) in their place. The ETDL is entrusted with the same powers as an administrator of an estate, including the ability to collect assets and pay any liabilities of the estate. What they may not do however is see to the distribution of the estate to the beneficiaries.
The appointment of an ETDL is itself governed by section 28 of the Estates Act. Section 28 of the Estates Act specifically contemplates that it is to be used in situations “touching the validity of the will of a deceased person, or for obtaining, recalling or revoking any probate or grant of administration”. Simply put, an ETDL may be appointed in situations where the very authority of the Estate Trustee has been questioned. Notably, this does not include estate litigation scenarios where the authority of the Estate Trustee themselves has not been questioned, such as dependant’s relief Applications under Part V of the Succession Law Reform Act, or claims for relief such as proprietary estoppel.
With regards to who should be appointed as ETDL, the Court of Appeal in Re Bazos provides that absent extraordinary circumstances (or the consent of the parties), a party to the proceeding should not be appointed as ETDL. The court in Langston v. Landen further contemplates that the individual appointed should not merely be an agent of any one or more of the parties involved in the litigation. The ETDL should be a neutral third party to the proceeding, who at all times should have the goal of doing what is in the best interest of the estate as a whole.
The ETDL’s authority to administer the estate ceases immediately upon the conclusion of the litigation for which they were appointed. Should the litigation result in a declaration that a particular will is to govern the administration of the estate, absent the court providing otherwise, the individual named as Estate Trustee in that particular will then has the authority to administer the estate. Should it appear that no individual will have the authority to administer the estate upon the conclusion of the litigation, the appointment of an alternate Estate Trustee should be sought as part of the closing of the adjudication of the litigation.
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