As seen in numerous Estate Trustee removal cases, there is no ‘one-size-fits-all’ approach, as each case is determined by its specific facts and surrounding circumstances.
Overview
In Deziel v. Deziel, 2024, ONSC 5279, Sandra, one of the Deceased’s four children, sought the removal of her siblings, Debra and Bryan, as Estate Trustees, alleging a breach of fiduciary duty. The central issue revolved around Bryan’s arrangement to purchase the Deceased’s home, an estate asset, for significantly less than its fair market value.
Analysis
The court reiterated that the standard of care required of trustees is one of ordinary prudence, akin to managing one’s own affairs. However, trustees are also bound by a duty to act impartially between beneficiaries, upholding an “even hand” when executing the terms of a trust.
In assessing whether a breach had occurred, the court referred to the key provisions in the Deceased’s Will:
- the Trustees must “exercise their authority and discretion in the best interest of the beneficiaries, whether or not that results in the appearance of maintaining an even hand among the beneficiaries.”
- the children of the Deceased are permitted to purchase the home at “fair market value; such sale to be completed not more than ninety (90) days after” death.
Considering the above provisions, the court maintained that trustees must prioritize the beneficiaries’ interests over that of their own, even when a Will permits self-dealing. Thus, the court determined the issue was not whether Bryan could purchase the home, but whether the home was sold to him at a below-market price due to a preference for him over the other beneficiaries.
Valuations obtained by Bryan and Debra established a market value of the home between $290,000 and $310,000. Between themselves, Bryan and Debra determined the purchase price would be $295,000 but reduced it to $280,000 for the value of the real estate commission that they decided would have been payable if the home was sold on the open market.
The court determined that as an Estate Trustee, Bryan had a conflict of interest in determining the sale price of the home and, by “setting a below-market purchase price, Bryan prioritized his own interests over those of the other beneficiaries.” Moreover, the court found that “Debra was complicit in this conduct and failed to act loyally towards all beneficiaries.”
The Court’s Decision
For the above reasons, the court concluded that both Bryan and Debra breached their fiduciary duties.
Citing Chambers Estate v. Chambers, the court noted that although a breach occurred, it did not warrant their removal as trustees. Despite family tensions, their actions were not malicious, but rather reflected an effort to manage the estate as they believed their mother intended.
To remedy the breach, the court ordered Bryan to reimburse the estate in the amount of $30,000.
Conclusion
Deziel v. Deziel reaffirms the stringent duties placed on Estate Trustees, even when the terms of a Will allow for self-dealing. This case also confirms the courts’ reluctance to remove trustees unless their conduct demonstrates egregious breaches of duty.
Ultimately, this decision serves as a reminder that even when trustees are given broad discretion, their primary obligations remain to act impartially and in the best interests of all beneficiaries.
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