Yesterday, I referred to the Ontario Superior Court decision of Rooney Estate v. Stewart Estate (2007), CarswellOnt 6560, which addressed the distinction between the role of the Estate Trustee and the role of the estate solicitor.
One of the responsibilities of the Estate Trustee is to prepare a set of accounts for the approval of the beneficiaries or the court, as may be required.
The decision expands on this requirement. Citing an article prepared by Rodney Hull, Q.C. (“Fundamental Principles and Concepts Relating to Executors and Trustees’ Accounts” (1983), Estates and Trusts Quarterly 146), the duty of an Estate Trustee in keeping accounts is said to include the duty:
1. To keep clear and accurate accounts of the estate, rendered at appropriate intervals to the beneficiaries;
2. To keep the accounts distinct from other accounts;
3. To retain supporting documents for all accounts;
4. To produce to any beneficiary the accounts when requested. Income or revenue beneficiaries are entitled to have accounts at reasonable intervals; accounts must be presented to residuary beneficiaries when entitled to possession;
5. To make all beneficiaries fully aware of their rights;
6. To disclose any and all breaches of trust;
7. To allow all beneficiaries adequate time to investigate the accounts;
8. To ensure that all beneficiaries have competent, independent advice in reviewing the accounts; and
9. To notify all interested beneficiaries of any court audit.
In Rooney, the court held that a release signed by a beneficiary was not a bar to compelling a passing of accounts. The beneficiary was not advised to obtain independent legal advice when reviewing the trustee’s accounts, and the accounts did not disclose that there were double charges for the trustee’s work made against the estate, or that the solicitor charged more for legal and trustee’s services than would arguably be allowed on a quantum meruit basis. As such, there was a breach of one of the obligations associated with keeping accounts. Furthermore, the release was not a fully informed one. Accordingly, it was not enforceable as against the beneficiary.
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The recent case of Rooney Estate v. Stewart Estate (2007), CarswellOnt 6560 serves to highlight the “distinct but complimentary” roles of the Estate Trustee and the estate solicitor. There, the court noted the responsibilities of each.
The court held that the Estate Trustee is responsible for:
1. arranging for the funeral and disposition of remains;
2. locating the will and instructing the solicitor to apply for the appropriate grant of appointment;
3. locating all the assets of the estate, including making arrangements to secure, preserve, and dispose of such assets in accordance with the terms of the will;
4. advertising for creditors and paying all debts of the estate including the filing of appropriate tax returns;
5. preparing a set of accounts for the approval of the beneficiaries or the court, as is required; and
6. distributing the estate.
The court noted that, generally, the role of the solicitor is to apply for a certificate of appointment for the trustee and to attend upon a passing of accounts. The Estate Trustee is entitled to pay these legal expenses out of the Estate.
The Estate Trustee can claim compensation for carrying out his or her duties. That compensation may also include reimbursement for professional help. However, the Estate Trustee cannot claim compensation for services provided by others whose services are charged to the estate.
Problems can arise where the solicitor performs work that falls within the Estate Trustee’s responsibilities. While this is permissible, the court will ensure that the estate is not being doubly charged. Further, the court will not normally allow a solicitor to charge solicitor’s rates for trustee work.
In the decision, the court cautions that the “solicitor should not perform trustee’s work unless instructed to do so by the trustee. If such a request is made, the solicitor should advise the trustee that he will render an account to the trustee personally for doing her work. Generally, the estate is not liable to pay this account; rather, it falls to the trustee to pay out of her compensation.”
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Does the Court have jurisdiction to set aside a Family Law Act election, or is such an election irrevocable?
This question was recently considered in the Ontario Superior Court of Justice decision of Iasenza v. Iasenza Estate 2007 CanLII 23351.
As background, Ontario’s Family Law Act (“FLA”) allows a surviving spouse to elect to either receive benefit under the deceased’s will (or on an intestacy if there is no will), or receive an equalization of net family property under the FLA. Normally, the surviving spouse seeks information regarding each of the options, and then elects for the greater benefit.
However, information regarding the values of each option is not always forthcoming in a timely fashion. The election must be filed within 6 months of the date of death, or the surviving spouse is deemed to elect to take under the will or on an intestacy.
The Court held that it did have discretion to set aside an election made in favour of an equalization. However, the Court noted that the discretion will be exercised sparingly and only in “restrictive circumstances where the interests of justice require it and where the balance of the interests of effected parties clearly warrants it.”
In considering whether to exercise its discretion, the Court will consider:
a. Was the election filed as a result of a material mistake of fact or law made in good faith?
b. Was there any responsibility or culpability on the part of the effected parties in relation to the election?
c. Was the notice of intent to seek revocation of the election given in a timely way, and in particular, how long after the 6 month filing period was notice given?
d. Has the estate been distributed or would interested parties otherwise be adversely effected?
e. Does the election result in an injustice to the surviving spouse in all of the circumstances?
On the particular facts of Iasenza, the Court decided to exercise its discretion and set aside the election filed by the surviving spouse. As a result, the spouse was entitled to receive 1/3 of the estate under the will, whereas she would have received nothing under the election.
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