It is very common to refer to a person’s “estate”, being the grouping of property and assets owned by a person at the time of their death, as a standalone entity. However, unlike a corporation, which is a separate legal person, an estate does not have that same legal personhood. This is an important distinction.
If an estate is not a separate legal person, it follows that it therefore cannot do certain things that people are able to do. Instead, the estate trustee is the person empowered and authorized to take steps on behalf of the estate.
One thing that the “estate” itself cannot do, is retain counsel. An estate trustee can retain a lawyer to act for him or her in his or her capacity as an estate trustee, but the lawyer would not be acting for the estate itself, given that the estate is not its own person.
The Honourable Justice Gilmore recently decided a motion seeking to remove a lawyer as counsel for an estate and as counsel for the estate trustee (in her capacity as estate trustee and personally) on the basis of a conflict of interest. The moving party alleged that the lawyer was in a conflict because he had been acting for (a) the estate trustee personally; (b) the estate trustee in her capacity as such; and (c) the estate itself. The estate trustee defended the motion on the basis that the lawyer was acting for her in her capacity as personal representative for the estate, and not for the estate itself or the beneficiaries of the estate, and therefore there was no conflict.
Justice Gilmore considered when a conflict of interest may arise, and ultimately did not find that there was any such conflict. She also stated the following in relation to the estate’s ability to retain a lawyer:
It is important to understand the distinction between the Estate and the Estate Trustee. Estates are not persons and cannot hire lawyers. It follows then that a lawyer hired by an Estate Trustee acts for that individual and not for the Estate.
Her Honour also cited an earlier decision of the Ontario Superior Court of Justice in which the court commented as follows:
I think the source of the problem is the misconception by…[the firm] that they are solicitors for the estate. Instead they are solicitors for the Estate Trustee: Estates cannot hire lawyers.
You can read Justice Gilmore’s decision in Javid v Watson, 2021 ONSC 7626, here.
Unfortunately, it seems that the confusion relating to an estate’s ability to retain counsel persists. In some circumstances, including the motion in Javid v Watson, this misunderstanding could end up being time-consuming and costly.
Thanks for reading,
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