Tag: trustee

06 Nov

Deferring Tax on Capital Gains – Hull on Estates and Succession Planning Podcast #85

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Listen to Deferring Tax on Capital Gains

This week on Hull on Estates and Succession Planning, Ian and Suzana continue their discussion about rolling assets into Trusts and issues surrounding deferring tax on Capital Gains.

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30 Oct

Appointing, Changing or Removing Trustees – Hull on Estates #83

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Listen to Appointing, Changing or Removing Trustees.

This week on Hull on Estates, Craig Vander Zee and Paul Trudelle discuss the issues surrounding trustee appointments and changes.

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25 Sep

The Removal of Estate Trustees – Hull on Estates #78

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Listen to "The Removal of  Estate Trustees"

In this episode, Craig Vander Zee and Paul Trudelle discuss various issues relating to the removal of trustees, including the considerations when negotiating the removal of trustees and their replacement. They discuss Craig’s recent presentation at an Ontario Bar Association continuing legal education program.

Click "Continue Reading" for the transcribed version of this podcast.

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27 Jul

Court Orders Parties To Get Along

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Unfortunately, the following quote applies to many of the cases that we deal with on a daily basis:

“To say that brother and sister do not get along in this case is an understatement. There is plenty of mistrust, suspicion and bitterness to go around. The applicant blames her brother for high-handed and unilateral conduct. He claims he has acted improperly. On the other hand, [brother] blames his sister for being non-communicative and hard to get along with. He was compelled to take the steps that he did because his sister which not deal with him.”

The quote is from Hill v. McLoughlin, 2007 CanLII 1334 (Ont. S.C.). There, brother and sister were co-estate trustees and residual beneficiaries of their mother’s estate. As a result of the above-noted mistrust, sister brought an application to have brother removed as an estate trustee.

The court found that while there was friction and hostility between brother and sister which hindered the administration of the estate, it was not satisfied that brother committed a breach of trust as alleged, or was in a conflict of interest.

The court stated that where the deceased has expressly appointed trustees, a court should be loath to interfere with the testator’s expressed intention except on the clearest of evidence that there was no other course to follow. The expressed wishes of the testator should be respected and not interfered with lightly. It is only where a court determines that the welfare of the beneficiaries requires removal and replacement of trustees that the court should undertake such action. It is not any mistake or neglect of duty on the part of the trustees which would lead to their removal. It must be shown that the non-removal of the trustee will likely prevent the trust from being properly executed.

While the court did not order removal of the brother, it did not condone his actions. The court required that the brother undertake certain steps, such as provide specific information to the sister.

On the issue of costs, judge ordered that each party should bear their own costs.

It is often hard for siblings or others to get along and cooperate in the administration of an estate. Further, actions taken by trustees, out of spite or otherwise, can serve to exacerbate the mistrust that already exists. Knowing that the courts will not automatically step in and remove an estate trustee in the circumstances should encourage the parties to an estate to act reasonably and simply get the job done.

Thank you.

Paul Trudelle

20 Apr

Joint and Several Liability of Trustees – Hull on Estates Episode #55

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Listen to "Joint and Several Liability of Trustees"

During Hull on Estates Episode #55, Sean Graham and Paul Trudelle discuss joint and several liability of trustees with respect to the administration of an estate. They  focus on avoiding liability when there are two or more estate trustees.

Paul and Sean examine this estate topic with respect to the case of Fales v. Canada Permanent Trust Co. and  Cooper (No. 2) Re.

05 Jan

Common Causes of Estate Litigation – Part II

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In considering causes of estate litigation sometimes you need not look further than to your extended family if the relationships within the extended family are acrimonious. 

An extended family can include a spouse, former spouse whether legal or common-law, children and their respective spouses (and former spouses), grandchildren and their spouses (and former spouses), siblings, nieces and nephews, extra-marital partners and other dependents, whether related to you or not. It is possible that any one of the above-noted people might bring a claim against the estate, or raise a dispute. Jealousy amongst family members and/or the anticipation or expectation that they are to or will receive all or a portion of the estate, however unwarranted, may lead to family members taking unreasonable positions with respect to claims they feel they have against the estate.

In making an estate plan then, it is critical to have any and all agreements that may affect your estate plan prepared before you die. These agreements could include separation, marriage, co-habitation, partnership, employment and shareholders agreements depending on the nature and make up of your estate.

While the secrets one has from a family may be extremely touchy, emotional or just difficult to disclose or deal with, their disclosure following death may lead to demands against the estate. An extra-marital relationship, an illness of whatever kind not known to the family, a relationship with a caregiver or promises made to caregivers regarding their compensation can be examples of such secrets. For instance, a friend or family member may be assisting with one’s errands or day to day care. If promises are made to the family friend or relative that they will be “looked after” upon one’s death, then they may make a claim against your estate following your death if their relationship with you and/or compensation is not clearly known.

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20 Sep

TRUSTEE/DIRECTOR CONFLICTS – PART II

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To carry on with the discussion of trustee/director conflicts of interest: the very stringent duties applying to trustees can clash with the equally stringent duties applying to directors of a corporation, when the trustee and director are one and the same person. Many corporations are speculative in nature. This is fine during a testator’s life, but the prudent investor rule, (as discussed in prior blogs and podcasts) may dictate that a speculative corporation is not the best investment for an estate.

Being a director of a corporation may require an entirely different skill set than a trustee, and may require specialized expertise that the trustee may not have. Since often a trustee becomes a director only as an afterthought, it may well be that the testator has not thought through the fact that the same person will need to fulfil both roles. If the executor also happens to be a shareholder of the corporation and keeps the estate assets invested in the corporation, there may be an obvious avenue for argument by the beneficiaries that the director used the estate assets improperly to enrich his interest in the corporation.

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19 Sep

TRUSTEE/DIRECTOR CONFLICTS – PART I

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There is scope for serious problems where an executor/trustee is also a director of a company in which the estate or trust has a large or controlling interest. This dual role of trustee/director has a broad potential for inherent conflict. Both roles have very stringently enforced inherent duties. Those two sets of duties can conflict in a given situation. The trustee’s first duty may be to try to sell the shares in the corporation if they are not a good or prudent estate investment. This decision will need to be made in most estates where the corporate holdings is a substantial portion of the estate.

During the testator’s life his or her assets will have been invested as the testator saw fit, for instance in risky but high return ventures. That entrepreneurial approach tends to be inconsistent with estate and trust principles, where somewhat conservative investment principles tend to be more suitable. For example, diversification is so important in trust administration that it has been enshrined in section 27 of Ontario’s Trustee Act, but diversifying may have been the last thing on the testator’s mind during his or her lifetime. Some of the fundamental duties of executors and trustees are:

1. the executor must obey the provisions of the Will; 2. the trustee must act impartially between beneficiaries; and 3. the trustee must exercise ordinary care and prudence.

Duties of a director are somewhat different. Section 34(1) of the Ontario Business Corporation Act provides for the following: 1. every director and officer of a corporation in exercising his or her powers in discharging his or her duties shall,

(a) act honestly and in good faith with a view to the best interests of the corporation; and (b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

These duties can come in direct conflict as I will discuss further in tomorrow’s blog. Thanks for reading. Sean.

07 Jul

ACCOUNTING DUTIES OF THE EXECUTOR AND TRUSTEE – THE FORM OF THE ACCOUNTS – PART V

Suzana Popovic-Montag Executors and Trustees Tags: , , , , , 0 Comments

A common area of complaint stems from an allegation that the executor or trustee was negligent in his or her efforts to administer the assets of an estate or trust. For a comprehensive discussion of the personal liability of trustees, see Maurice C. Cullity, Q.C., "Personal Liability of Trustees and Rights of Indemnification", (1996) 16 E.T.J. 115.

Generally speaking, most claims or objections to accounts arise out of what is perceived by beneficiaries to be negligence or failure on the part of the executor or trustee to maintain a proper standard of care and skill in his or her office. The most common complaints arise out of the following situations:

  • investments by the executor or trustee which are not authorized by the will or by the law;
  • the failure to provide a proper mix of investments so as to balance competing interests, such as life interests as opposed to remainder interests;
  • the negligent or improper investment by the executor or trustee in investments of a speculative nature;
  • an executor or trustee can be held liable for not maintaining the value of assets, such as a residence, by effecting proper repairs and would be liable for such neglect;
  • executors or trustees must be extremely careful to make sure that all proper considerations are taken into account in making elections under the Income Tax Act, so as to avoid any criticism by the beneficiaries;
  • care must be taken by an executor or trustee to ensure that prompt filings of returns are made and that penalties and interest payable on late filings are not incurred; and
  • while trustees are seldom culpable for what are perceived by beneficiaries to be unnecessary delays, care must be taken to ensure that damages are not in fact incurred by the beneficiaries by reason of delays caused by inattention.

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