Mutual Fund Rep Lands In Hot Water After Becoming Executor And Trustee For Clients

Written on behalf of Arbesman Hamilton LLP

Finding someone to appoint as an executor or trustee in your estate can be challenging. An executor or trustee has many significant legal issues to address in order to protect the estate and its beneficiaries. An executor is a person appointed by a testator to carry out their wishes and directions as outlined in the will. Meanwhile, an estate trustee is appointed by a testator to care for their property in a trust for the benefit of the beneficiaries. It’s natural for people to seek out an expert (such as a finance expert) to serve in these roles due to their importance. As seen in a recent story from Ontario, not everybody with a background in finance is an appropriate choice.

Mutual fund rep accepts appointments as executor and trustee

The story, which was reported on a website called Advisor’s Edge, explains how a mutual fund rep, employed by an investment company from 2002 to 2016, allowed himself to be named as co-executor/trustee for two of his clients. He took on the responsibilities of these roles for both clients after their deaths in 2011. The story explains that this is contrary to the rules of Canada’s Mutual Fund Dealers Association.

In the first case, the rep was originally named co-executor of the estate, and later took on the role of sole executor after the other co-executor passed away. In this case, the client had also named the rep as a beneficiary of the estate when he was allotted 3,054 of the client’s Air Miles, which he accepted. While the value of the Air Miles was under $500, it was still against the MFDA’s rules.

The story reports that in addition to being permanently banned from working in the mutual fund industry, the rep had also agreed to pay a $40,000 as well as $5,000 in costs.  

The importance of proper planning

This story underscores the importance of properly considering who one’s executor and/or trustee will be. At Arbesman Hamilton LLP, we help our clients by providing personalized, effective solutions to their circumstances and objectives. We can also help our clients consider the impacts of any decisions relating to their will or estate with the goal of minimizing litigation or problems such as the one we discussed in this blog.

Our lawyers have extensive experience in all areas of trust law,
including family trusts, estate freezes, inter-vivos trusts, testamentary
trusts, alter-ego trusts, and joint spousal trusts. We also offer dual wills
for business owners
and Henson trusts for disabled family members. We are available to act as a
trustee, offering comparable or better value than that of a trust company.