Tag: estate trustee
Today on Hull on Estates, Jonathon Kappy and Stuart Clark discuss removing estate trustees, and reference the recent 2013 case, Hawkins v. Hawkins Estate. If you have any questions, please email us at firstname.lastname@example.org, or leave a comment on our blog page.
Further to yesterday’s blog, in the case of McDougall Estate, the beneficiary complained about the trustee’s compensation on the passing of her accounts. In issue was whether the trustee’s compensation should be reduced because she:
- Made an improper distribution to a charity that was not authorized by the Will.
- Failed to make an inventory of the contents of the deceased’s house and failed to offer the beneficiary any of the deceased’s personal effects.
- Pre-took compensation.
- Paid too much in legal fees out of the estate.
The court found that even though the charitable gift failed because it was not a specified amount or share, the trustee’s interpretation of the Will was not unreasonable and the trustee was not liable for an innocent mistake, made in good faith. She was therefore not required to reimburse the estate and should not have her compensation reduced.
The contents of the house were of little value and had to be cleaned out for sale. The trustee never received any indication from the beneficiary that there was anything of sentimental value that she wished to receive. In the circumstances, the Court found that the compensation should not be reduced for the manner in which the trustee dealt with the personal effects.
The trustee pre-took compensation of 5% of the value of the estate as originally calculated but, after adjustments, she admittedly overpaid herself by $1,163.24. Estate trustees ought not to pre-take compensation unless authorized in the trust document or by approval of the executor’s accounts by the beneficiaries. The proper remedy was payment of interest on the amount pre-taken. Accordingly, the trustee was ordered to repay $1,163.24 plus interest of $360 to the estate.
It was not unreasonable for the trustee to seek legal advice to respond to the inquiries from the beneficiary’s lawyer. While amounts paid to respond to questions about the administration of the estate were not at first instance a proper charge to the estate, such costs were allowed because they were properly incurred by her to respond to the beneficiary’s challenges to her administration of the estate.
The payment of legal fees from the estate that ought to have been paid by the estate trustee is a form of pre-taking of compensation and so the estate trustee was liable for interest on that amount, which was fixed at $70.00.
Sharon Davis – Click here for more information on Sharon Davis.
Listen to The Estate Trustee During Litigation
This week on Hull on Estates Megan Connolly and Craig Vander Zee discuss the topic of the estate trustee during litigation (ETDL). Their discussion is based off a paper Paul Trudelle prepared and spoke about at the Hull and Hull breakfast series on June 4, 2009. They look at the circumstances when you would need an ETDL, the procedure for appointing the ETDL and the powers and duties of the ETDL.
For more information on this topic, see:
Jordan Atin’s article, The Estate Trustee During Litigation, in ‘Estate Litigation’ by Brian A. Schnurr. volume 2. 2nd ed. (Toronto: Thomson Carswell, 2000)
If you have any comments, send us an email at email@example.com or leave a comment on our blog.
Those who follow American politics have probably heard of Roland Burris. He is controversial Governor Rod Blagojevich’s choice to replace the Senate seat vacated by President –Elect Barack Obama. While the constitutional debate continues on whether or not Burris can be seated in the Senate, another issue that has grabbed the headlines is Burris’ final resting place.
Burris has commissioned for himself a grand mausoleum consisting of two columns and three tablets referring to himself as a trail blazer and listing all his political and business accomplishments, both minor and major, with room for more to be engraved. The monument, referred to “as his resume in stone” had attracted unfavourable attention from the media and earned Burris the nickname “Tombstone”. Needless to say, it was probably not the effect Burris intended.
While many people include burial instructions in their Will, such instructions are not binding on the estate. The estate trustee has the ultimate responsibility to make burial arrangements. For those who wish to make elaborate arrangements, they should make those instructions clear to the estate trustee and other family members, so that the estate trustee is not criticized for the expense to the estate. Additionally, we can take Burris’ lead and make our own arrangement during our lifetime. Click here to read Paul Trudelle’s paper on estate issues and dealing with the body after death.
Thanks for reading,
Upon the death of a person, a duty arises to bury or otherwise dispose of the remains in a decent and dignified fashion. But who does this duty fall upon?
It is well established in the jurisprudence for Ontario that plans for the service and burial arrangements are the responsibility of the estate trustee. This responsibility can conflict with the wishes and expectations of the deceased and family members, particularly in a religious context.
In Saleh v. Reichert, the deceased was of the Muslim faith. Her husband had converted to the Muslim faith for the purpose of there marriage. There was evidence indicating that the deceased expressed her wish to be cremated upon her death. The deceased’s husband was appointed as the estate trustee without a will and intended to honour the deceased’s wishes. The deceased’s father objected to the cremation on religious grounds.
The court affirmed the fundamental duty of an estate trustee is to ensure that the remains of a body be disposed of in a decent and dignified fashion. The court held that religious law has no bearing on the case. In Ontario, burial and cremation are both means that would meet the requirement for disposal in a decent and dignified fashion. The deceased’s father’s action was dismissed.
It is important to note that it was acknowledged that there is no property in a body. Therefore, any instructions left by the deceased, whether in a Will or otherwise are only precatory and are not binding on the estate trustee.
Listen to Probate Issues and Requirements
In Monday’s blog, I noted the increasing prevalence of new on-line businesses serving to assist estate trustees with the location of estate assets. Of course, locating the asset is just the first step. The estate trustee has to then manage the asset. In most instances this involves liquidating the asset or distributing it in specie to the beneficiaries depending on the testator’s intention.
Shares held by a deceased in a private company present a particular challenge to an estate trustee. Should they be sold or should the estate trustee participate in the business as a going concern?. This quandry, if the will gives no guidance, is compounded when the deceased holds the majority of shares and leaves a controlling interest in such a corporation.
While not always a simple question to answer, in such circumstances it seems self-evident (and just makes good business sense) for the estate trustee to be a director of the company. In such capacity, the executor is positioned to watch over the management of the business and protect this asset of the estate. The issue was addressed in an oft-quoted excerpt from Lucking’s Will Trusts (Re) (1967) All E.R. 726, where the Court states:
“Now what steps, if any, does a reasonably prudent man who finds himself a majority shareholder in a private company take with regard to the management of the company’s affairs? He does not, I think, content himself with such information as to the management of the company’s affairs as he is entitled to as a shareholder, but ensures that he is represented on the board.”
Have a great day,
I recently attended a client meeting where the issue of mediation was hotly debated. My client expressed reluctance in participating in a process with a party that my client regarded as intransigent and obstinate. My client also thought that proposing mediation would suggest to the other side that our case was weak and we were looking for a way out. After persuading my client that mediation was at least worth considering, a more substantive debate arose as to when to mediate. This debate deserves some comment.
In many ways, mediation is all "the rage" and early mediation is especially championed in the estate setting. In general, society is reluctant to see family members fight over what is perceived as a windfall. The courts reflect and promote this view. My colleagues and I have all blogged on the merits of mediation and I won’t repeat them here. But parties can mediate too early. Often parties attend mediation without knowing the full extent of the estate assets or merely having a vague idea. Liquid assets might be readily ascertainable, but have all the liquid assets been uncovered i.e. have proper inquiries been made? Assets such as art, vintage cars, or family antiques are harder to evaluate and may require a professional appraisal, all of which takes time.
Moreover, the parties have often not exchanged relevant documents before attending mediation, something which they would be required to do if mediation took place at a later stage. Exchanging relevant documents will help a party better understand the risks they face in pursuing litigation, the weakness of their case, and the strength of their opponent’s case (and vice versa). Forewarned is forearmed.
Back to my client meeting where it was decided that it was too early to mediate. An allegation had been made that an estate trustee had stolen money from the estate. However, no one was quite sure how much was taken and whether the estate trustee acted alone or in concert with an investment advisor. Some sort of accounting was required, supported by back-up documentation before mediation could take place and ultimately be effective. A court order might even have to be obtained to get at the necessary information. Mediation would happen, but at the right time with the right information. It is imperative that a party know their case so that they know when to mediate and how best to settle.
Justin de Vries