Siblings at Odds Over Administration of Estate
Being named executor of an estate is not an easy responsibility to take on. An executor’s role is to carry out the testator’s wishes and directions and is appointed in the testator’s will. It is a fiduciary duty that requires the executor to act in food faith while making decisions that are in the best interest of the beneficiaries or trust named in the will. Occasionally, beneficiaries of an estate may try to have an executor removed from their role. But, as seen in a recent decision from the Supreme Court of Newfoundland and Labrador, doing so is not easy.
The testator dies on February 21, 2013, leaving a will and two codicils to be administered by his spouse. However, she died on August 29 of that same year. As a result, Letters of Probate of the estate were granted to their four children on April 12, 2015. The children became co-administrators of their father’s estate on February 23, 2016. By the time of the trial, the four children had accomplished much of the work to be done, but there was an impasse over the implementation of some aspects of the will and codicils. This led to a stalling in the distribution of cash from their mother’s estate. One of the children applied to the courts to remove all four children as executors and to put the estate in the hands of a Public Trustee.
One of the children alleged that two of her siblings were trying to interpret the will in a manner that favoured themselves as beneficiaries. Ultimately, the interpretation would have favoured all of the beneficiaries. Still, the court summarized her position, stating “this conflict of interest and the resulting impasse has resulted in a situation that is adverse to the welfare of the beneficiaries. She points to (two of her siblings) as being the architects of the impasse. In her application she says, at paragraph 41 – ‘…they believe they have all the correct answers’. Although it is to her financial detriment, (she) opposes the valuation and other positions advanced by (two of her siblings).”
The court’s analysis
The court noted the framework for consideration of removal of an executor is well established, and is not a decision to be taken lightly. The court’s objective is to “ensure that the estate is properly administered and that the interests and welfare of the beneficiaries are protected.” The court looked at a 2006 decision to explain the grounds upon which an executor could be removed:
“The removal of a trustee or personal representative is something that will not be lightly undertaken. Before doing so, the court has to be satisfied that it is in the interests of the beneficiaries generally that removal should occur. As Lord Blackburn stated in Letterstedte v. Broers and Another [1881-85] All E.R. 882 (PC) at p. 887 (a case cited consistently by courts in this province) the court’s “main guide must be the welfare of the beneficiaries”. If it is clear that the continuance of the trustee or personal representative in office would be detrimental to the execution of the trusts or the administration of the estate, the court may remove him or her.
“12. The grounds upon which a trustee, and hence an executor administrator, may be removed include: positive misconduct amounting to abuse of trust; endangerment of the estate or trust property; want of honesty or reasonable fidelity; lack of proper capacity or ability to execute the duties of office; and conflict of interest.”
The court added that other factors could also be considered, including the timing of the application, as well the available options and costs associated to address any issues.
In this case, there were no allegations of misconduct, dishonest, or abuse of trust. Nor were there allegations the estate had been mismanaged or endangered. Instead, the allegation is that the executors were allowing their positions as beneficiaries to take precedence over their roles as executors.
The court determined that while the positions taken by the two siblings may have been advantageous to them, the court held it does “ not consider disagreement over the interpretation of a will to be of the same character as a preferential exercise of authority in the management of an estate. The fact that an executor is also a beneficiary should not preclude that individual from suggesting an interpretation that is advantageous.” The court also found that the appointment of a public trustee would add more uncertainty to the situation as well as costs to the estate. The public trustee would likely seek the court’s direction on the areas the executors disagreed on, something the executors can do on their own.
At Arbesman Hamilton LLP, our experienced estate lawyers provide executors, trustees, and attorneys with advice on their responsibilities and obligations. We aim to 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 schedule a consultation today.