Disposing of the body is a fundamental responsibility of an estate trustee, and an estate trustee is entitled to be reimbursed from the estate for legitimate and reasonable funeral expenses. In considering what is “reasonable”, the court will consider the deceased’s “station in life”, and other circumstances, such as any direction from the deceased in the will or otherwise, the size of the estate, and cultural and religious beliefs, practices and traditions: see Chernichan v. Chernichan (Estate), a decision of the Queen’s Bench of Alberta.
In Zaradic Estate (Re), the Supreme Court of British Columbia disallowed an estate expense of $11,525.01 claimed by the two estate trustees for a trip to Croatia to deliver and scatter the deceased’s cremated remains. There was no specific provision in the will directing that the remains be taken to Croatia. However, the will did provide that the executors could incur expenses in relation to the deceased’s funeral. The executors also gave evidence, which was accepted by the court, that the deceased wanted his remains taken to Croatia. However, the court held that there was no justification for BOTH estate trustees to travel to Croatia. Therefore, only half of the cost of the trip was allowed.
(In Zaradic, the estate trustees, who were friends of the deceased, were also denied executor compensation. Although the will provided that they could claim compensation in the amount of 10% of the value of the estate, the court held that their actions disqualified them from receiving any compensation. The estate trustees had attempted to sell the deceased’s residence to their daughter at a price well below market value. The residual beneficiary commenced litigation in order to stop the proposed improvident sale. “The actions of the executors were an egregious breach of their fiduciary duty. If they had been successful, the beneficiary would have been swindled out of 50% of the estate’s value, and the executor’s (sic) daughter, their only child, would have thereby profited. … the actions of the executors are sufficiently egregious to disentitle them to any fee.”)
In The Estate of George Francis Perkins, the estate trustee claimed payment for airfare for his son and daughter-in-law (the deceased’s grandson and granddaughter-in-law) to travel to the deceased’s funeral. The court disallowed half of this expense, stating that it was unreasonable for the estate to pay for BOTH tickets, in light of the small size of the estate.
Where expenses are incurred for funeral and burial related matters, the beneficiaries of the estate will examine these closely, and the courts will likely disallow anywhere there is a hint of unreasonableness, or where it appears that the estate trustees were unfairly taking advantage of their position at the expense of the estate.
Have a great weekend.
We have blogged previously on section 35 of Ontario’s Trustee Act, which relieves a trustee who has committed a technical breach of trust but has otherwise acted honestly and reasonably. This provision may not be available to a trustee who, confronted with an ambiguous situation, fails to seek the advice and direction of the court, as is the trustee’s right under section 60(1) of the Trustee Act. Section 60(1) states:
60. (1) A trustee, guardian or personal representative may, without the institution of an action, apply to the Superior Court of Justice for the opinion, advice or direction of the court on any question respecting the management or administration of the trust property or the assets of a ward or a testator or intestate.
Justice Cullity describes the applicable principles in Merry Estate v. Plaxton, 2002 CanLII 32496 (ON S.C.) at paragraph 35:
" On the question of costs, I am satisfied that no criticism can properly be directed at Mr. Meredith for bringing this application. Section 60 of the Act entitles trustees to seek the opinion, advice and direction of the court with respect to the administration of a trust and, in cases where significant doubt exists as to the scope of their powers and responsibilities, they may not be protected under section 35 if they fail to do this. Although such applications must not be made frivolously – and not merely to relieve applicants from making decisions that are part of their responsibilities under the terms of the trust – they are entitled to have their costs paid out of the trust property if, in the opinion of the court, the application was properly brought. I believe this is such a case."
Merry Estate v. Plaxton also contains a discussion of a trustee’s right of indemnity with respect to costs properly incurred, and the relationship between this right of indemnity and litigation cost awards for trustees from trusts. In that application for the court’s advice, the trustee Mr. Meredith was awarded full indemnity for his legal expenses in bringing the application.
Have a great day,
Chris M. Graham – Click here for more information on Chris Graham.