There are some solutions for resolving the problems of conflict of interest between directors in the director/trustee role which I’ve been discussing in the last three blogs. Some of the potential solutions are as follows:
1. Muliple executors – where there is at least one trustee who has an inherent conflict of interest, that conflict can be balanced out by having one or more co-trustees who can generally put the interest of the trust first without valid conflict of interest problems. That way, the beneficiaries who complain about the conflict of one trustee can be answered by the fact that that trustee was outvoted by the other two in any event. The trustee with a conflict might even decide not to vote on decisions that invoke the conflict of interest.
2. Disclosure of information to beneficiaries on an early and comprehensive basis – is another way to avoid allegations of conflict of interest. At the very least, beneficiaries can be canvassed to see whether there is going to be a problem with a particular decision. If they fail to object, it is somewhat less likely that they will do so later on and the Court may have sympathy for an executive that gave them the chance before making the decision.
READ THE TRANSCRIBED PODCAST HERE
During Hull on Estates Episode #24, we discussed the issue of disclosure of information by trustees to beneficiaries. We referred to the cases:
- O’Rourke v. Derbyshire,  A.C. 581 (H.L.); Re Ballard Estate (1994), 20 O.R. (3d) 350 (O.C.G.D.); Fox v. Fox Estate (1996), 10 E.T.R. (2d) 229 (Ont. C.A.); and
- David Steele’s article, “Beneficiary’s Right to Know”, 4th Annual Estates and Trusts Forum, LSUC.