Disagreements over estate matters, including will disputes, are not uncommon. Often these relate to the amount of money a beneficiary is inheriting or the actual will itself, including claims of forgery, undue influence or a lack of testamentary capacity.
However, there are also sometimes claims relating to the appointment of executors, estate trustees and attorneys. This article looks at the role of estate trustees and whether they can be removed from their position. We also report on a recent decision of the Superior Court of Justice of Ontario in which an application to remove an estate trustee was brought, with the applicant alleging that the estate trustee had not acted diligently in the performance of his duties. The main piece of property of the estate is a portrait purportedly of William Shakespeare painted during this lifetime.
An estate trustee is a person appointed by the testator (the person making the will) to care for the property in a trust for the benefit of the beneficiaries of the trust.
This is a different position from the executor of the will, although both functions may be fulfilled by the same person. An executor is appointed by the testator to carry out their wishes and directions according to the will. If the will creates a trust, then the estate trustee manages this trust once they receive the property designated for the trust from the executor.
The estate trustee must manage the trust property in the best interests of the beneficiaries and in accordance with the testator’s instructions. The estate trustee owes fiduciary obligations to the beneficiaries.
Under section 5 of the Trustee Act 1990, the Superior Court of Justice may make an order for the appointment of a new trustee or trustees, either in substitution for or in addition to any existing trustee or trustees.
However, the court will not lightly interfere with the testator’s choice of estate trustee. Clear evidence is required that the removal of the trustee is necessary and the court’s main consideration is the welfare of the beneficiaries. As such, in order for the estate trustee to be replaced, their acts or omissions must be of such a nature as to endanger the administration of the trust.
The case of Meuse v Taylor involved the estate of Mrs. Sullivan, who died in April 2020. Her husband died in 2019. Their long-time accountant was the named estate trustee.
The estate’s primary asset is a portrait owned by the husband who left it to his wife. He had acquired it from his mother, who inherited it from her mother, who had brought it with her when she immigrated from England to Canada in the late 19th Century. The portrait’s value depends on whether it can be authenticated as a contemporaneous painting of Shakespeare. If it can be authenticated, a 2016 appraisal gave it a value of US$50 million.
Many people claim to have a stake in the proceeds of sale. Mr. Sullivan agreed in 2002 to split the proceeds between four other families who might have ownership claims. A law firm and the estate trustee’s accounting firm provided services in connection with the portrait. The applicant for removal of the estate trustee also claimed that he was owed money.
The applicant sought to remove the estate trustee and have himself appointed in his place. He made a range of claims in support of the application, some of which are examined below. Justice Gomery explained:
This application, however, is not a beauty contest between the parties. My task is not to decide whether [the applicant] is better qualified than [the estate trustee] to sell the Sanders Portrait, whether the beneficiaries would have more confidence in him, or whether he would otherwise be a better estate trustee than [the estate trustee].
The applicant argued that the estate trustee had not taken steps to perform his duties, such as steps to probate Mrs. Sullivan’s will and open a bank account for the estate.
Her Honour decided that the evidence fell far short of establishing that the estate trustee was delinquent in performing his duties. Her Honour found that he had accomplished a good deal considering he had only been in the position for five months before the application to remove him was commenced. The estate trustee had done a range of things, including hiring an antique expert to assist in selling the portrait.
The applicant argued that, because the estate trustee has no specialized knowledge of Elizabethan art, he cannot make reasonable or informed decisions concerning the sale of the portrait.
Her Honour explained that this argument was founded on fundamental misapprehensions about the role of an estate trustee. An estate trustee is not required to have subject-matter expertise about the estate’s assets. What is important is that the testator had confidence that the individual appointed will carry out the wishes expressed in their will. Furthermore, sale of the portrait is only a part of what the trustee must do – there were complex legal, accounting, insurance and tax issues involved in administering the estate.
Justice Gomery held that the applicant had failed to provide any compelling evidence that the estate trustee had demonstrated such incompetence in arranging to sell the portrait that his continued administration would put the estate at risk. There was no evidence that he was predisposed to sell the portrait for less than market value. Her Honour dismissed the application to remove the estate trustee.
The lawyers at NULaw provide executors, trustees, and attorneys with fulsome advice on their responsibilities and obligations, and will help them mitigate any legal risks and liabilities so that they are protected and the best interests of the beneficiaries and estate are maintained. Contact us online or at 416-481-5604 to book a consultation.