Can a Beneficiary Force an Interim Distribution from an Estate?
A question that I am often asked by both beneficiaries and Estate Trustees, is whether the Court can compel an Estate Trustee to make an interim distribution.
Beneficiaries and Estate Trustees are often at odds as to how quickly they wish to proceed with an interim distribution. A beneficiary is generally eager to receive their entitlement from an Estate as soon as possible. Estate Trustees, however, carry significant personal liability should they too hastily pay out Estate funds, and therefore tend to exercise caution before distributing.
In the decision of Parson v McGovern, a motion by a beneficiary (who had a one-half interest in the Estate) sought to compel the Estate Trustees to make an interim distribution of almost all of the remaining assets of the Estate to the beneficiaries. The beneficiary requested that this distribution be made before the Estate Trustees passed their accounts (and obtained Court approval).
The Court considered the prior decisions in Re Blow, Brighter v. Brighter Estate, and others, and concluded that the following factors should be considered by the Court when deciding whether to compel an Estate Trustee to make an interim distribution to a beneficiary:
- are the Estate Trustees deadlocked;
- have the Estate Trustees acted with mala fides;
- have the Estate Trustees failed to exercise their discretion to make an interim distribution;
- have the Estate Trustees behaved unreasonably or breached their fiduciary duty and duty of good faith and fairness to the respondent (the beneficiary); and,
- would a beneficiary suffer under undue prejudice.
In applying these factors to the case at hand, the Court considered, in part, that the Estate Trustees were not deadlocked, had proceeded to pass their accounts in an expeditious fashion, did not extort the beneficiary into signing a waiver/release, did not cause delay in administering the Estate, and there was no evidence the beneficiary would be unduly prejudiced if an interim distribution was not made. Based on this, the Court did not compel the Estate Trustees to make an interim distribution, and the motion by the respondent beneficiary was dismissed.
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