It is trite law that an estate trustee has an obligation to account for his or her dealings with the assets of the estate. However, questions often arise with respect to the extent of an estate trustee’s duties to account for assets that may or may not be part of the estate.
Such questions arose in the recent decision of Munro v. Thomas, 2021 ONSC 3320 (CanLII). As stated by Gibson J. in the opening paragraph of the decision, “This is ultimately a dispute about trust which, as seems so often to be the case, involves at its heart a dispute amongst siblings about a family cottage.”
In Munro, a beneficiary and child of the deceased brought an application to compel the estate trustee to produce full bank records going back to 2013 (the deceased died in 2019), to produce full and complete medical records of the deceased, to submit an affidavit explaining all gifts made and substantial transactions entered into by the deceased (notably, the deceased gifted her cottage to 2 of her 4 children in 2011 and sold her home in 2013), and to submit to cross-examination.
The estate trustee resisted the relief being sought, arguing that it was overbroad, and not consistent with his obligations to account for assets falling within the estate.
The court heard evidence presented by the trustee on the deceased’s capacity at the time of the cottage transfer and home sale. The court concluded that the allegations of incapacity, undue influence and resulting trust were unsupported by the applicant’s evidence and accordingly, the relief sought was not to be granted.
The court dismissed the application, but allowed the estate trustee to apply, if he wanted to, to pass his accounts. Further, the court noted that a beneficiary could compel a passing of accounts. Arguably, in the context of a passing of accounts, the beneficiary could raise an issue there as to whether an asset was appropriately part of the estate or not. The court cautioned that a beneficiary who challenged a trustee’s accounting without good reason or who tries to force the trustee to pursue assets that fall outside of the estate can be held liable for costs.
It should be noted that the applicant did not seek a passing of accounts. The court held that the estate trustee may apply to pass his accounts, notwithstanding the fact that no Certificate of Appointment was granted. Although not referred to in the Munro decision, the decision of Haley J. in Re Silver Estate, 1999 CarswellOnt 4217 is clear authority that an estate trustee does not need to probate the will in order to pass accounts.
Thank you for reading. Have a great Mother’s Day weekend.
The job of being an attorney for personal care for an incapable person is not an easy one. The attorney often has to make difficult decisions regarding an incapable person’s medical care and treatment, personal care, food, clothing, and shelter. A particularly difficult decision that can arise in the case of older adults is the decision of whether an older incapable person should be placed in a retirement or long-term care home.
I recently came across a decision that considered a personal care attorney’s decision to move his mother, Ann, into a long-term care facility. As set out in Corbet v Corbet, 2020 ONSC 4157, prior to the move, Ann had been living with her personal care attorney’s son (Ann’s grandson), and his spouse. The personal care attorney lived in the USA. The grandson and spouse were the defendants to an action brought by the personal care attorney, and the defendants had brought the motion that was dealt with in the decision. The motion sought an order that Ann return to live with the defendants.
The Corbet decision discussed the powers and duties of an attorney for property, as governed by the Substitute Decisions Act, 1992, S.O. 1992, c. 30 (the “SDA”). Section 66 of the SDA provides that a personal care attorney must exercise his or her powers and duties diligently and in good faith. If the attorney knows of prior wishes or instructions of an incapable person, they shall make their decision in accordance with those prior wishes or instructions. If the attorney does not know of a prior wish or instruction, or if it is impossible to make the decision in accordance with the wish or instruction, the attorney shall make the decision in the incapable person’s best interests. Although making a determination of what is in the incapable person’s best interests can be difficult, the SDA does set out the factors that the attorney must consider, as follows:
- the values and beliefs that the guardian knows the person held when capable and believes the person would still act on if capable;
- the person’s current wishes, if they can be ascertained; and
- the following factors:
- (i) Whether the guardian’s decision is likely to,
- improve the quality of the person’s life,
- prevent the quality of the person’s life from deteriorating, or
- reduce the extent to which, or the rate at which, the quality of the person’s life is likely to deteriorate.
- (ii) Whether the benefit the person is expected to obtain from the decision outweighs the risk of harm to the person from an alternative decision.
- (i) Whether the guardian’s decision is likely to,
Ultimately, the court determined that it was not prepared to grant the order sought by the defendants. Some of the factors that were determinative included the following:
- Ann had entrusted her only son as her attorney for personal care.
- The court should not attempt to micromanage an attorney’s day-to-day handling of an incapable person’s affairs unless there is clear evidence the attorney is not acting in good faith.
- Before making the decision to move Ann to the long-term care facility, the attorney consulted with Ann’s family doctor, and had a comprehensive assessment of the defendants’ home done by the LHIN case manager.
- Although Ann had expressed that she wanted to “go home”, the court found that Ann perceived her home as the home she had shared with her late husband, and not the defendants’ home.
- There was no evidence that the personal care attorney failed to consider the best interests criteria as set out above.
- There were allegations that the defendants had mistreated or neglected Ann, and that they had misused or misappropriated her money. As a result, it remained to be determined whether they were “supportive family members” with whom the attorney has a duty to consult under the SDA.
Attorneys for personal care would be well-advised to carefully consider their decisions, in light of the guidelines set out in the SDA, and to document their considerations in making decisions on behalf of an incapable person.
Thanks for reading,
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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, 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, 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. 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”, 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.