Tag: duties

20 Feb

New SCC Decision on Duty to Disclose Trust to Beneficiaries

Doreen So Continuing Legal Education, Estate & Trust, Executors and Trustees, Passing of Accounts, Trustees, Uncategorized Tags: , , , , , 0 Comments

The Supreme Court of Canada released a decision last Thursday that is a must read for estates and trusts practitioners.  Interestingly enough, Valard Construction Ltd. v. Bird Construction Co., 2018 SCC 8, arose from a commercial matter.

Bird was a general contractor for a construction project.  When Bird subcontracted with Langford, Langford was required to obtain a labour and material payment bond which named Bird as trustee of the bond.  If Langford was delinquent in paying its contractors, the bond would permit the contractor to sue and recover from Langford’s surety on the condition that notice of the claim must be made within 120 days of the last date in which work was provided to Langford.  Langford became insolvent and some of Valard’s invoices went unpaid.  Unfortunately, Valard was not notified of the existence of the bond and did not inquire about whether there was a bond in place until after the 120 day notice period.  The surety denied Valard’s claim and Valard sued Bird for breach of trust.  This matter was dismissed at first instance by the Alberta Queen’s Bench, dismissed again by the Alberta Court of Appeal, and finally reversed by the Supreme Court of Canada (with a dissent from Justice Karakatsanis).

Justice Brown for the majority (per McLachlin C.J., as she then was, Abella, Moldaver and Rowe J.J.) found that Bird had a fiduciary duty to disclose the terms of the trust, i.e. the bond, to Valard notwithstanding the fact that the express terms of the bond did not stipulate this requirement.  Justice Brown was clear that “While the ‘main source’ of a trustee’s duties is the trust instrument, the ‘general law’ which sets out a trustee’s duties, rights and obligations continues to govern where the trust instrument is silent” (para.15).  Justice Brown then went on to say that a beneficiary’s right to enforce the terms of the trust is precisely what keeps the trustee from holding the “beneficial as well as legal ownership of the trust property” (para. 18).  Otherwise, no one would have an interest in giving effect to the trust.

With this logic in mind, Justice Brown developed the following framework at paragraph 19,

“In general, wherever “it could be said to be to the unreasonable disadvantage of the beneficiary not to be informed” of the trust’s existence,[17] the trustee’s fiduciary duty includes an obligation to disclose the existence of the trust. Whether a particular disadvantage is unreasonable must be considered in light of the nature and terms of the trust and the social or business environment in which it operates,[18] and in light of the beneficiary’s entitlement thereunder. For example, where the enforcement of the trust requires that the beneficiary receive notice of the trust’s existence, and the beneficiary would not otherwise have such knowledge, a duty to disclose will arise.[19] On the other hand, “where the interest of the beneficiary is remote in the sense that vesting is most unlikely, or the opportunity for the power or discretion to be exercised is equally unlikely”,[20] it would be rare to find that the beneficiary could be said to suffer unreasonable disadvantage if uninformed of the trust’s existence.”

Thanks for reading and more to follow later this week on Valard Construction Ltd. v. Bird Construction Co.

Doreen So

29 Mar

Hull on Estates #460 – Obligations of Trustees Pertaining to the Rule in Saunders v Vautier

Hull & Hull LLP Hull on Estate and Succession Planning, Hull on Estates, Podcasts, PODCASTS / TRANSCRIBED, Show Notes, Show Notes Tags: , , , , , 0 Comments

This week on Hull on Estates, Jonathon Kappy and Noah Weisberg discuss the duties trustees owe to beneficiaries as it relates to the rule in Saunders v Vautier.

Should you have any questions, please email us at webmaster@hullandhull.com or leave a comment on our blog.

Click here for more information on Jonathon Kappy.

Click here for more information on Noah Weisberg.

29 Jan

Fit for the job?

Hull & Hull LLP Estate & Trust, Executors and Trustees, Hull on Estates, Hull on Estates, Litigation, Trustees Tags: , , , , , , , , , , , , , 0 Comments

What does an executor do?

The first responsibility is to tend to funeral arrangements and then to gather up all the information relevant to the Estate. This information includes the ownership and value of assets, as well as the nature of all Estate liabilities. These responsibilities need to be taken seriously. 

Some other duties include: make provisions for dependants; notify various government agencies of the deceased’s death; collect income from assets; decide about investments; seek advice as required.  The executor’s role is similar to that of a trustee: both owe a duty to the beneficiaries. 

When one plans his or her Estate and prepares a Will, it is useful to consider the attributes of a successful executor.  Some questions might be:

  • Is the person organized?
  • Does the person have financial skills? 
  • What is the demeanour of the person who is being considered as an executor?

A recent British article asks more questions. One point, among many, is that “Honesty and conscientiousness are important, but if you are appointing more than one executor – and often that’s a good idea – they also need to be team players.” 

Each situation is different but the hard and soft skills of a potential executor are likely useful considerations.

Examples abound to illustrate what might go awry. Take the Estate of the renowned violinist, Isaac Stern. In 2004, the beneficiaries of the Estate were disappointed when the executor failed to include the value of the deceased’s  New York apartment in the calculation of the Estate’s value. This decision resulted in a shortfall of funds to meet the Estate’s liabilities. Legacy items, including musical instruments, were apparently sold at auction to the beneficiaries’ collective dismay.

Choose your executor(s) wisely.

Enjoy your Thursday.

Jonathan Morse

04 Nov

Dealing with Estate Issues That Arise Immediately Upon Death – Hull on Estates #135

Hull & Hull LLP Estate & Trust, Executors and Trustees, Guardianship, Hull on Estates, Hull on Estates, Pets, Podcasts, PODCASTS / TRANSCRIBED, Show Notes, Show Notes, TOPICS, Wills Tags: , , , , , , , , , , , , , , , , , 0 Comments

Listen to  Dealing with Estate Issues That Arise Immediately Upon Death

This week on Hull on Estates, David Smith and Natalia Angelini talk about the duties an estate trustee he or she is charged with from the moment of a testator’s passing. Duties include locating the will, making funeral arrangements and being responsible to see the intentions of the testator preserved.

Feel free to send us an email at hull.lawyers@gmail.com or leave us a comment on the Hull on Estates blog.

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24 Jun

Compensation for Work Done by Estate Trustees and Solicitors – Hull on Estates #116

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Listen to Compensation for work done by estate trustees and solicitors.

 

This week on Hull on Estates, Paul Trudelle and Diane Vieira discuss compensation for work done by estate trustees and estate solicitors.

 

Case citation:

Rooney Estate v. Stewart Estate 2007 WL3019262 (Ont. S.C.J.), 2007 CarswellOnt 650

Comments? Send us an email at hull.lawyers@gmail.com, call us on the comment line at 206-350-6636, or leave us a comment on the Hull on Estates blog.

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