This Estate Trustee Must Go?
I have written before questioning whether being named as estate trustee is a headache or an honour. https://www.linkedin.com/pulse/honour-headache-considerations-named-estate-trustee-adrian?trk=mp-reader-card What happens, however, if the person named as estate trustee is creating problems for the beneficiaries. When will the courts remove an estate trustee?
As a starting point, courts are extremely reluctant to remove an estate trustee. Rather they prefer to defer to a testator's wishes regarding the choice of who should administer the estate. The courts will, however, remove a trustee if doings so is necessary for the "welfare of the beneficiaries." Generally that means the trustee is endangering the estate assets or property. A recent case, Bunn v Gordon, illustrates.
The testator of an estate valued at close to a million dollars named his girlfriend of three years as estate trustee. He left the girlfriend his principle residence and a secondary property was to be divided between the girlfriend and his two minor children. The bequests to the children were to be held in trust for them until they reached the age of 21. The children were also given rights of first refusal over the contents of both the principle residence and the secondary residence. In other words, the children were allowed to keep any items of sentimental value.
The administration was contentious from the start and eventually the children moved to have the girlfriend removed as trustee. The made four assertions of impropriety. First, the girlfriend had refused to provide them with a copy of the death certificate and had told them they could obtain it from Service Ontario. The girlfriend had removed a trailer from the property and was keeping it at her vacation property. She claimed the trailer had been damaged and had no value. The girlfriend had also sold an antique desk and cupboard that had been in the family for several generations which had sentimental value to the children. Finally, the girlfriend had sold the secondary property.
In evaluating the complaints, the court ruled that failure to provide the death certificate was not significant enough to cause removal. It noted however, that this failure did nothing to ease the difficulties between the girlfriend and the children. In other words, trustees should respond to reasonable requests and cooperate with beneficiaries. The trailer also was not fatal to the girlfriend's position as it could be restored to the estate. The trailer's relocation did, however, demonstrate that the girlfriend was not being careful with estate assets. The final issue of selling the secondary property was not fatal either as the funds were retained by the estate.
The desk and cupboard were more problematic. The girlfriend claimed that she had received these items as gifts from the testator. She had not, however, kept them but had sold them at auction. This sale demonstrated a lack of concern for the feelings and well-being of the children. The judge added that even if the items had been gifts, the girlfriend should have considered the feelings of the beneficiaries before selling the antiques.
It is possible that the judge would not have removed the girlfriend as trustee if the estate administration would have been concluded in the near future. However, the existence of minor children whose bequests would be held in trust for years complicated the matter. There was no reason to believe that the trustee and children would be able to move past the contentious nature of their relationship. It is probable that this factor played a significant role in the decision.
The Lessons for Trustees: Cooperate with beneficiaries as much as reasonably possible and take into account any sentimental attachment they might have to estate assets. Clearly communicate progress in the administration of the estate to all beneficiaries. Finally, it is crucial to remember that you act on behalf of the beneficiaries, not on your own behalf.
The Lesson for Beneficiaries: Clearly communicate in writing with trustees regarding your desire to retain any specific assets. Removal of a trustee is extremely difficult and it is better to demonstrate clear communication than to get into conflicting stories about what was said.
Bunn v Gordon, 2015 ONSC 4768 https://www.canlii.org/en/on/onsc/doc/2015/2015onsc4768/2015onsc4768.pdf
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