When do beneficiaries need to be served as parties to estate litigation?
Estate litigation is somewhat unique in that it frequently impacts the interests of individuals who may not actively be advancing or defending the claim, namely the other beneficiaries. Although there are obvious examples of claims which could impact beneficiaries, including challenges to the validity of a Will under which the beneficiary has an interest, as any claim by or against an estate carries the prospect of increasing or decreasing the funds available to be distributed any claim could conceivably impact the interests of other beneficiaries. This raises an interesting question. Should the beneficiaries personally be named as parties to any litigation relating to the estate so they can be provided the opportunity to advance or defend any claims which could affect their interests, or can the executor or trustee alone represent the interests of the estate or trust and the beneficiaries by extension?
Rule 9.01 of the Rules of Civil Procedure states that a proceeding may be brought by or against an executor or trustee without joining the beneficiaries as parties unless the matter concerns one of the exceptions noted by rule 9.01(2), which are:
- to establish or contest the validity of a will;
- for the interpretation of a will;
- to remove or replace an executor, administrator or trustee;
- against an executor, administrator or trustee for fraud or misconduct; or
- for the administration of an estate or the execution of a trust by the court.
Rule 9.01 confirms that simply because litigation involves an estate or trust it does not necessarily follow the beneficiaries must be named as parties to the litigation, as many claims may be brought by or against the executor and/or trustee alone even if the results of the litigation could impact the interests of beneficiaries. The ability for the executor and/or trustee to represent the estate or trust alone is consistent with the powers provided by section 48(2) of the Trustee Act, which authorizes the executor or trustee to settle any claims on behalf of the estate or trust without the consent of the beneficiaries so long as the settlement was entered into in “good faith”.
Thank you for reading.