Indemnification of Legal Fees
When a person accepts the role of Estate Trustee, it is a common assumption that they will be indemnified for any expenses incurred as a result of the administration of the Estate. This includes legal fees, which are typically recoverable from the Estate assets and take priority over distributions to beneficiaries. However, this is not always the case.
The denial of legal fees of an Estate Trustee has been ordered when all or a portion of the legal fees has been incurred to protect the personal interest of the Estate Trustee. This was the case in Etobicoke Human Society v. Rinaldi, 2015 CarswellOnt 20495, 14 E.T.R. (4th) 86 (Ont. S.C.J.). In this particular case, the Estate Trustee’s interests in propounding the Will were twofold. Not only did he have a fiduciary duty to propound the Will but also stood to gain a personal financial benefit from the Estate if the Will was successfully propounded.
The Estate and Trusts Reports recently published “Etobicoke Human Society v. Rinaldi: A Case Comment” written by Ian Hull and Suzana Popovic-Montag (the “Case Comment”), which interestingly, addresses the Court’s finding that an Estate Trustee does not have a duty to propound a Will when the testator’s capacity is challenged and therefore is not entitled to indemnification of legal fees.
I encourage you to read the Case Comment as it provides an excellent overview of the common law principles relating to an Estate Trustee’s duty to propound a Will and the underlying purpose for providing indemnification for reasonable legal costs.
You may also be interested to read: Solicitor as Trustee: Indemnification for Legal Fees
Thanks for reading!