Toronto Estate Lawyer : Hull & Hull Law Firm : Trust Mediation and Succession Planning : Serving Ontario, Ottawa, Mississauga, Hamilton

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Anne Werker recently brought an interesting case to my attention. In Rooney Estate v. Stewart Estate[1], the solicitor who performed the executor’s duties attempted to rely on a release signed by a beneficiary in his response to an application that he pass accounts in his capacity as de facto trustee.

Pierce J. held that in order for a release to be enforced, the beneficiary who signs the release:

1.   must be “fully informed”;
2.   must have received competent legal advice in a review of the accounts;
3.   should understand how compensation has been charged; and
4.   should know what legal services have been provided and what the fees were.

Pierce J. also held that a distribution cannot be withheld pending the execution of a release. It is simply fiction for an executor to believe that he/she can refuse to distribute the estate until a signed release is in hand. A holdback must be reasonable and demonstrably justifiable in the circumstances (i.e. tax liability or the costs of a passing). 

However, in the end, some common sense must prevail. In a simple administration, it is unlikely that formal accounts will be prepared for passing either because no compensation is claimed or the costs of doing so are prohibitive. However, the executor will likely ask for a release on the distribution of the estate. In that case, transparency may be the answer. By communicating regularly with the beneficiaries, sending them pertinent information and updates, and/or preparing an informal accounting (including how compensation has been taken), a court may just be convinced that a signed release is good enough.

“TGIT”

Justin

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Surprisingly, there is very little case law on point when it comes to trustees and their duty to consult with one another.

Where there is harmony and open communication between the trustees, consultation comes naturally and is often routine. Decisions are essentially reached by consensus.  However, with a passive trustee, the passive trustee simply fades into the woodwork and is forgotten.  Obviously, very little consultation takes place.  Moreover, where there is outright discord and suspicion between trustees, trustees simply stop talking to one another.  In that situation, one of the trustees essentially takes the lead in administering the trust.  Where there is a majority rule clause, the majority often believe that they can ignore the minority or dissenting trustee without consequence.  However, in my opinion, trustees who disregard their duty to consult do so at their own peril.

Simply put, a majority rules clause in a trust agreement does not give the majority of trustees the right to blithely ignore the minority trustee.  What is clear from the case law is that a trustee is required to be fully informed and active in terms of managing a trust.  The courts generally frown upon a passive trustee.  Moreover, the duty of a trustee to be fully informed and active can be used as a springboard to argue that there is a duty to consult amongst trustees and that the majority of trustees cannot simply ignore the minority and his/her dissenting opinion.  Whether there is a majority rule clause or not, trustees should consult with one another and share pertinent information prior to any decisions being made.

Thanks for reading.

Justin

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Whether voluntary or mandatory, mediation is now a common occurrence in estate and trust litigation. Much has been written and blogged on the subject. I therefore thought it worthwhile to comment on the changing nature of the plenary session from a practioner’s point of view. 

Traditionally, the plenary session brought the parties and their counsel together at the outset of the mediation so that the mediator could review the ground rules or “rules of engagement”, discuss the benefits of reaching a mediated settlement, and touch upon role of the mediator during the process. Counsel were then invited to present their client’s case usually adopting an adversarial stance and focusing on a “rights-based” approach to the mediation.  Next up were clients who, understandably, often became angry or confrontational.  

However, plenary sessions have largely changed. It is now widely recognized that allowing counsel and parties to make opening statements only inflames the situation and places the focus on what divides the parties rather than what unites them. Consequently, the mediation is off to a poor start and the mediator spends considerable energy unwinding the newly minted ill-will. 

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A Mary Carter Agreement originated from the Florida decision entitled Booth v. The Mary Carter Paint Company. In effect, this case stands for the proposition that in return for payment to the plaintiff of a specific sum of funds, the settling defendant caps her potential liability. For example, a defendant may enter into an agreement with a plaintiff, where it is understood that, regardless of the outcome, the defendant agrees to compensate the plaintiff in the amount of $20,000.00. If the plaintiff is awarded at trial a judgment that exceeds this amount, she is required to enforce the ruling against the other defendants not subject to the Mary Carter Agreement.

Not only can a Mary Carter Agreement be a useful litigation strategy, but it may also be beneficial to an estate trustee who is charged with defending a claim against the estate. Had the deceased entered into a Mary Carter Agreement during her lifetime, she would have likely been able to cap her exposure, which may translate into a significantly larger estate.

Thanks and have a great weekend,

Allan Socken

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While mediation has been highly lauded as a "win-win" situation for all parties, this form of alternative dispute resolution is not without its critics. Owen M. Fiss has stated that mediation prevents the progression of law, thereby inhibiting the courts from fulfilling their role in society. According to Fiss, the duties of the court are not simply to find compromise amongst the disputants, but rather to provide force to the values encompassed by laws of society.

Mediation is often an effective tool for the resolution of estate disputes. While mediation generally provides a solution to complex matters at a considerable cost saving than would be the case if the matter proceeded to trial, the question is whether this undermines society as a whole. In other words, so many estate cases (and by extension all legal cases) rely on the progression of the common law. If mediation is utilized to resolve matters in a private and confidential environment, the opportunity does not arise for the advancement of the law had the case been disposed of at trial.

Notwithstanding the above, mediation is a powerful and effective tool in settling estate disputes. That is to say, mediation can mean the difference between the reparation of familial relationships, as opposed to the rift between relatives through the adversarial litigation process.

Thanks and have a great day,

Allan Socken

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The Six-Minute Estates Lawyer 2008 hosted by The Law Society of Upper Canada is rapidly approaching. This CLE event is bound to contain very useful and practical insights for estate litigators, as well as for practitioners who deal with estate matters as part of their practice. In particular, Justin de Vries, counsel to Hull & Hull LLP, will be speaking on the topic entitled "Family Law Act Elections and the Impact of Iasenza v. Iasenza Estate."

Section 6(1) of the Family Law Act provides surviving spouses with the opportunity for an equalization of net family property. Interestingly, this provision is a "one-way equalization," which means that no equalization claim is payable by a surviving spouse to the estate. While the surviving spouse has the choice to take her share of the estate pursuant to the terms of the deceased's Will or make a Section 6(1) election, the latter option carries a six month limitation period from the date of death.

Notwithstanding the above, what happens if the surviving spouse elects to take her share under Section 6(1), but later realizes that this was a mistake? On the face of it, it appears unjust to allow an individual to revoke her election, given that it is incumbent on the surviving spouse to choose wisely with the assistance of judicious counsel. On the other hand, however, why should someone be prejudiced where an error has been made in fact or law?

Iasenza v. Iasenza Estate grapples with these difficult issues. In effect, this decision provides that the court has the authority to set aside a spousal election. For further information and to register for the Six-Minute Estates Lawyer 2008, please click here.

Allan Socken

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Administering an estate poses many challenges for an estate trustee. An interesting question was considered in Rozon v. TransAmerica Life Insurance, which dealt with the issue of whether an insurance company may require that a Certificate of Appointment of Estate Trustee or probate be obtained prior to the funds being advanced to the estate by an insurance company.

In this decision, more than $2,000,000.00 in life insurance proceeds was payable to the estate. Had probating the Will been required, the fees which would have resulted would have been close to $80,000.00. In deciding this case, Mr. Justice Charbonneau of the Ontario Court (General Division) ruled that probating a Will was not required for the purposes of advancing the insurance proceeds to the estate. Rather, he was of the view that the evidence obtained from an unprobated Will was sufficient. Costs were also awarded in favour of the estate trustees. Mr. Justice Charbonneau's ruling was affirmed by the Ontario Court of Appeal.

Despite this significant ruling, insurance companies continue to be hesitant with respect to paying out the proceeds of a life insurance policy without receiving the probated Will. It is for this reason that it is likely that further cases will make their way to the courts. It will be fascinating to see how the courts address these issues.

Thanks and have a great day,

Allan Socken

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It is trite to say that estate disputes carry a tremendous financial and emotional toll on the disputing parties. A clear and up-to-date estate plan and Will are generally the best ingredients to avoid litigation. Of course, when the testator's intentions are disputed, it is often necessary to retain legal counsel. While lawyers can address the legal complexities associated with the dispute, they are not professionally trained to handle the emotional baggage that is part and parcel of the legal process.

Recently, I had the opportunity to speak at a workshop run by Linda Somers who acts as a legacy coach for individuals who seek to take control of the legacy they want to pass on to their family and friends. While a legacy coach is not versed in the intricacies of the law necessary to create a Will or an estate plan, the coach instead focuses her attention on assisting others as to how they wish to be remembered during their lifetime.

One of the most interesting aspects of legacy coaching is providing individuals with the opportunity to prepare ethical wills. It should be noted, however, that an ethical will is not a legal document. Rather, its goal is to convey a person's values, beliefs, hopes and aspirations to family and friends. The ethical will serves a unique purpose, given that it transmits the individual's "raison d'etre" during her lifetime. This information simply cannot be conveyed in the often complex and unemotional legal jargon contained in a Will.

Thanks and have a great day,

Allan Socken

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Ontario Progressive Conservative Leader John Tory recently opined that Ontario is in a recession. While Ontario's last economic downturn resulting in a recession was almost twenty years ago, many people still recollect this dismal period as a time when unemployment was high and investment opportunities appeared to be non-existent.

Difficult economic times may be an appropriate instance for trustees to encroach on the capital of the trust for the benefit of a beneficiary. In determining whether a trustee has the power to encroach, one must first look to the specific wording of the Will or the trust instrument. Once it has been determined that the power to encroach exists, it is then necessary to ascertain the scope and extent of this power.

While trustees are generally granted "uncontrolled discretion" in exercising their power to encroach on capital, the scope and power of such discretion is subject to the even-hand principle. A trustee's fiduciary obligation requires him/her to maintain an "even-hand" between income and capital beneficiaries when exercising a discretionary power, unless the trust provisions stipulate otherwise.

Let's hope our economy rights itself in the near future.

Thanks,

Allan Socken

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As we age, not only is it prudent to carefully prepare an estate plan, but consideration must also be given to the question of what happens if we become incapable of making financial or medical decisions. While the Substitute Decisions Act sets out the legal requirements for a valid power of attorney for personal care and property, it cannot address who a suitable attorney would be for a particular individual. It is for this reason that great attention and care should be taken to ensure that the attorney selected will, in fact, respect your wishes.

In the case of a power of attorney for property, the attorney has a fiduciary obligation to you and is frequently involved in your private affairs, including your banking, mortgage payments and even deciding how much money you receive on a day-to-day basis. Although there are legal safeguards to ensure that your power of attorney for property is acting in your best interest, such as requiring a formal court audit or passing of accounts to take place, there is still a great deal of trust placed in the hands of your attorney.

Thanks and have a great day,

Allan Socken

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The Court of Appeal recently rendered its decision in Madore-Ogilvie and Ogilvie v. Ogilvie Estate, 2008 ONCA 39.  One of the issues was whether the proceeds from a jointly owned life insurance policy could be included in the deceased’s estate for the purposes of satisfying a dependant’s relief claim. 

One of our previous blogs reviews the facts of the case and the appellate decision of the Divisional Court, which I will not repeat except to say that the Divisional Court reversed the application judge’s finding that the policy could be included as part of the estate, and decided that the contractual rights of the spouse to the joint policy trumped the needs of the deceased’s dependants.

Two of the minor children appealed the Divisional Court’s decision and asked that the application judge's decision be restored.  The deceased’s spouse cross-appealed. 

The Court of Appeal dismissed both the appeal and the cross-appeal, finding as follows:

-          the policy was not caught within the ambit of section 72(1)(f) of the Succession Law Reform Act;

-          the policy was not an arrangement that was made to jeopardize the maintenance of the deceased’s dependants; and

-          section 199 of the Insurance Act did not apply to the policy.

Have a good day,

Natalia

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There are several interesting OBA continuing legal education (CLE) events in the Trusts & Estates Section in the next two weeks.

One is a luncheon program on March 25, 2008 commencing at noon addressing the topic of Power of Attorney Fraud. This program promises to discuss this escalating problem, some recent developments in criminal fraud proceedings, and how careful and creative planning with respect to Power of Attorney documents can help avoid family conflicts as well as costly and senseless litigation.

The speakers and panel slated include several lawyers, a forensic accountant and a detective from the Hamilton Police Service, Crimes Against Seniors Unit.

The other event is a half day program on April 2, 2008 commencing at 9:00 a.m. This program looks at the latest trends which counsel are seeing in the areas of estate planning, administration, litigation, and passing of accounts as well as trust and charity law.

Topics include: The Future of Mediation: Thinking Outside the Box, The Liability of the Passive Estate Trustee – The Hidden Danger, The Limits and Limitations to a Beneficiary’s Recourse Before and After a Judgment Passing Accounts, Developments in Estate Planning, Guardianships and Settlements of Personal Injury Litigation, View from the Bench and Emerging Trends Outside Toronto.

The Chairs of this program are Justin de Vries and Eric Hoffstein.

Both programs are being held at the OBA Conference Centre, 20 Toronto Street, 2nd Floor, Toronto. Information on each program can be found on the OBA’s website www.oba.org/.

Have a great day.

Craig.

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I thought I would close off this week’s blogs with a recent decision that reviews the law on surrogate parents.

In M.D. v. L.L. a married couple wished to have a child.  Unfortunately, the wife, M.D., was unable to bear children.  So, the couple turned to a family friend, L.L., who was willing to act as a surrogate mother.  M.D. and L.L. papered the terms of their understanding in a Gestational Carriage Agreement. 

After L.L. gave birth to the child, a Statement of Live Birth had to be completed and filed with the Registrar, which statement required L.L. to place her name on the form as the “mother” of the child, notwithstanding the Agreement and the fact that M.D. and her husband were the genetic parents of the child.

M.D. and her husband sought orders declaring themselves to be the parents of the child, and declaring L.L. and her husband not to be the parents.  The Court granted the orders sought, and in so doing held that despite a statutory definition defining “mother” by reference to birth, the genetic parents were the true parents.

This decision is likely going to be the authority relied upon in surrogate parenting litigation to come.

Have a great long weekend!

Natalia

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In a recent Superior Court of Quebec decision a family’s patriarch, Leon, died intestate in 1968.  The main asset of his estate was his home (registered in Leon’s name) where he resided with his wife and son, Walter.  At law Leon’s wife was entitled to 1/3 of the home, and Walter was entitled to 2/3 of the home.  Following Leon’s death, his wife and son continued to live in the home and dealt with it as their own property.

Leon’s wife died intestate in 1983.  Her sole heir was Walter.  The home remained registered in Leon’s name, but Walter continued to live there and dealt with it as his own property.

Walter disappeared after 1992, and in 2004 was declared dead.  Walter’s maternal and paternal cousins began fighting over Walter’s estate.  While all the cousins agreed they were equal beneficiaries of Walter’s estate, the argument of the maternal cousins was that they were beneficiaries of his mother’s estate (including her interest in the home), since she died intestate and Walter had never formally accepted her estate.

After applying various provisions of the Quebec Civil Code, the Court held that Walter, by being an absentee, was deemed to have accepted his mother’s estate because an absentee can only renounce through his representative. 

This case reveals an interesting distinction between Quebec and Ontario legislation, the latter of which does not impose any obligation to accept or reject one’s interest in an estate.

Until tomorrow,

Natalia

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Listen to Personal Liability

This week on Hull on Estate and Succession Planning, Ian Hull talks about the extensive personal liability of an estate trustee.

Also, in the March 2008 issue of Canadian Lawyer, the Toronto Estate Law Blog was ranked as one of Canada's Top Ten Law-Related Blogs by Gerry Blackwell. The list also included Michael Geist's blog, Law is Cool and the Rule of Law blog from Kelowna, BC. In the same issue of Canadian Lawyer, Suzana Popovic-Montag was featured as a leader in the world of law and social media. Kudos!

Comments? Send us an email at hullandhull@gmail.com, call us on the comment line at 206-457-1985 or leave us a comment on our blog at www.hullandhull.com.

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If an offer is negotiated and later accepted, how is a court to resolve a later dispute over the form of the release?  The Court in Glaspell v. Glaspell Estate, (2008) 36 E.T.R. (3d) 315 held that a release that does not commit a signatory to taking any steps other than those contemplated by the settlement agreement will suffice, even if overly wordy.  The parties had reached a settlement agreement: the evidence disclosed mutual intention to create a legally binding contract between the parties and an eventual agreement containing all of the essential terms agreed upon.    

Unfortunately, the settlement agreement did not specify the form of release.  When it came time to dismiss the action, the plaintiff refused the defendant's form of release.  So the defendant brought a motion to enforce the apparent settlement.  The judge allowed the motion and denied the plaintiff's cross-motion to amend the settlement terms, dismissing the action.  

An implied aspect of this decision is that mere form of release is not necessarily an essential or fundamental term of an agreement so long as the essential terms themselves are not altered.  The decision does not preclude the possibility in other situations though.

Enjoy your weekend.

Chris Graham

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"Access to Justice" tends to be a topical issue in the newspapers.  The general feeling seems to be that legal costs are spiraling ever upwards to the detriment of the public.  Take this article from CanWest News Services.

Few would dispute that litigation costs can sometimes grow rapidly, particularly where the issues are complex or a litigant acts unreasonably.  However, it seems to me that for many other legal services, there has actually been a reduction over the years.  I am often surprised to find out the legal costs for the average client to: make a Will, buy or sell a house purchase, buy or sell a small business, set up a company or other routine solicitor's work. 

I suspect many lawyers, especially sole practitioners, might agree that many of these expenses have actually been reduced for clients over the years.  They may even say that the standard of care tends to rise over time, so what was simple forty years ago is more complex today. 

I suppose at the end of the day sympathy for lawyers doesn't make for a great news story...

Have a great day.

Chris Graham

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The OBA Civil Litigation Section recently held a Continuing Legal Education seminar on the deemed undertaking rule (Rule 31.1.01(3)) and the filing of transcripts.  For those who have not had a chance to listen to our (excellent, eloquent!) podcast on this point, here is the abridged version:

Practitioners of all stripes can take solace in the fact absent a sealing Order granted under s. 137(2) of the Courts of Justice Act http://www.e-laws.gov.on.ca/html/statutes/english/elaws_statutes_90c43_e.htm , once a transcript is filed with court by any party, it is accessible to the public notwithstanding the Deemed Undertaking Rule.  This extends to transcripts filed in support of motions, including motions to challenge a refusal to answer.  This public access principle is to be strictly applied, according to Justice Cullity's recent decision in Lewis v. Cantertrot Investments Ltd., [2007] O.J. No. 4201 (S.C.J.).

Parties to a motion may merely list a transcript along with all other relevant documents: R. 37.10(2)).  But the transcript - meaning the entire transcript - must be filed at least two days before the hearing by the party relying on it: Rule 34.18(2).  Since the consent of all parties is required to file a partial transcript (R. 38.18(3)), in practical terms the filing party itself vetoes whether a partial transcript is filed. 

After a transcript is filed, the onus is on the examinee to seek a sealing Order.  The test for a sealing Order laid down by the Supreme Court of Canada in Deganais v. Canadian Broadcasting Corp., [1994] 3 S.C.R. 835 (S.C.C.) and restated in R. v. Mentuck, [2001] 442 (S.C.C.) is very strict, however.  For an application of this test, see the recent case of Moore v. Bertuzzi , [2007] O.J. No. 5113, where a sealing Order was denied to the applicant defendant.

Conclude your review of this interesting set of principles with Rule 34.18(4), which states the Judge  "may read only the portions to which a party refers": R. 34.18(4).  So the public right to access extends to the entire transcript though the Judge only reads a portion of it. 

Another good reason to avoid trials where possible.

Chris Graham

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In January, Justin de Vries wrote a blog about an 84 year old Orthodox Jew who was on life support.  He had suffered brain damage from a fall and was unable to walk, talk, breathe, or eat on his own.  Doctors said that he had no chance of recovery and wanted to remove him from life support. 

His family opposed the idea saying that it would hasten his death, which would be tantamount to murder and would run counter to the gentleman's Orthodox beliefs.  The gentleman did not have a living will and had not left any end of life instructions.      

On February 13, 2008, a judge ruled that the case should go to trial and the court should determine whether or not he should be taken off life support.  At issue will be whether the doctors can disconnect him in the face of opposition from the family. 

In Manitoba, the College of Physicians and Surgeons leaves the ultimate decision to the doctors, providing that they consult with family members and give them four days notice of when treatment will end. 

For their part, the gentleman's family says that they have obtained medical opinions from the United States that suggest his brain function is improving. 

The motions judge directed that the trial be held quickly, so hopefully the dispute will be resolved soon. 

Have a great weekend,

Megan F. Connolly

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James Brown’s estate has been subject to litigation by his grandchildren, his children, people who say they were his children but whose paternity has not been established, three former wives, and a companion who claims she was his fourth wife. Allan Socken discussed this litigation in his blog on January 8, 2008.   

Now, according to an article in the New York Times, his court appointed estate trustees have filed a lawsuit against his long-time business managers, alleging that they stole millions of dollars from Brown.  In the suit, the trustees also accuse a law firm and bank of conspiracy to defraud, negligence, and breach of fiduciary duty. 

The suit alleges that, since 1999, one of Brown’s advisors siphoned $10 million from an investment account that the advisor was controlling.  It also accuses the advisor of forging Brown’s signature in order to obtain a 40% interest in a James Brown dancing doll. 

In the suit, the trustees also allege that the bank that is named was negligent for failing to prevent the advisors from mismanaging funds through accounts that it held and accuse the law firm of working in tandem with the business advisors to take excessive fees and commissions. 

It’s unclear what impact this litigation will have on the claims being brought by various family members, although it has the potential of increasing the amount of money that is in the estate to fight over. 

Of course, given the amount of litigation underway, it might all go to the lawyers. 

Thanks for reading,

Megan F. Connolly

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I recently came across Osgoode Hall Law School’s blog site about the Supreme Court of Canada, The Court. Under the supervision of faculty, law student editors write on the upcoming decisions that are scheduled to be heard or have been recently decided by the Supreme Court of Canada.

There are a number of legal scholars who regularly comment on the decisions and readers are encouraged to post their own comments.  The “exchange of ideas” format is designed to appeal to both legal practitioners and other interested citizens and makes for interesting reading. The archives go back to November 2006 and decisions are searchable by subject.

Aside from the commentary, there are a number of online resources related to the Supreme Court, including online texts and a statistical database of recent Supreme Court decisions. There is also a link to Top Court Talk where correspondents from around the world discuss the decisions of their highest court.

It is an interesting way to keep informed with what is going on with the Supreme Court.

 Enjoy your day,

Diane Vieira

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Environmental consciousness is spreading, and is making its way into the realm of estates.

There is a growing movement towards “natural burial” or “eco-cemeteries”, and away from more traditional practices such as a conventional burial or cremation. Both of these traditional practices are said to have adverse environmental effects that can be avoided through natural burial. 

Conventional burial normally involves the use of formaldehyde, a potential carcinogen. Vast amounts of steel, wood and cement are involved in the burial process. Cemeteries are often simply fields of grass, with grave markers, that require watering, mowing, pesticides and herbicides.

As for cremation, the process requires huge amounts of natural gas. Emissions from crematories contain hazardous materials.

In natural burial, the body is prepared without use of chemical preservatives such as embalming fluids, and the body is buried in a biodegradable casket or shroud. The physical layout of the cemetery is distinct in that traditional grave markers are avoided, and the grave markers are designed to blend in with the landscape. Pesticides and herbicides are avoided. 

For more information, visit the Natural Burial Co-operative website at http://www.naturalburial.coop/

According to their website, the Natural Burial Co-operative is currently working to establish Canada’s first natural burial preserve.

The movement still appears to be in its infancy; however, interest in the concept of natural burial is growing.

Have a great weekend.

Paul Trudelle

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One final note of caution arises from the Rooney (2007), CarswellOnt 6560 decision – a decision of the Ontario Superior Court of Justice that I have referred to in my blogs earlier this week. This caution refers to the release that the Estate Trustee seeks from the beneficiaries.

In Rooney, the beneficiary was provided with a form of accounts, and was told that if she signed a release, she could receive a distribution from the estate. (The court was critical of this practice.) The beneficiary did so.

Later, the beneficiary sought to compel a passing of accounts. The court allowed the Application.

The trustee had asserted that because of the release, the beneficiary could not compel a passing. The court stated “It is not an answer to say that the beneficiary approved of the accounts and gave a release. One of the obligations of the solicitor acting for the trustee is to ensure that all beneficiaries have competent, independent advice in reviewing the accounts. There is no suggestion by the solicitor that he advised the [beneficiary] to obtain independent legal advice when reviewing the trustee's accounts which he had prepared.”

Additionally, the court noted that the account rendered by the solicitor to the estate was a blended account, and included both solicitor’s work and trustee work. “The solicitor was in the best position to know what charges related to which services. He was also in the best position to know what portions of his fee account should be paid by the trustee out of her compensation or by the estate. There is no evidence that he gave any advice about these distinctions to the beneficiary so that she could consider them.”

The court concluded by stating that “There is no evidence that the beneficiary executed the release knowing that double charges for the trustee's work had been made against the estate. There is no evidence that the beneficiary knew the solicitor charged the estate more for legal and trustee's services than would arguably be allowed on quantum meruit basis. In these circumstances, the release was not a fully informed one; it cannot be enforced against the beneficiary.”

What is an Estate Trustee to do to protect himself or herself? The Estate Trustee might send out accounts that are as complete and informative as possible, so that the release can truly said to be an informed one.   Solicitor’s accounts might be included, and these accounts could specify the nature of the services provided. Beneficiaries should be advised to obtain independent legal advice. 

In many cases, an Estate Trustee may wish to obtain a court passing in any event.

Thanks for reading.

Paul Trudelle

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 Yesterday, I referred to the Ontario Superior Court decision of Rooney Estate v. Stewart Estate (2007), CarswellOnt 6560, which addressed the distinction between the role of the Estate Trustee and the role of the estate solicitor.

One of the responsibilities of the Estate Trustee is to prepare a set of accounts for the approval of the beneficiaries or the court, as may be required.

The decision expands on this requirement. Citing an article prepared by Rodney Hull, Q.C. (“Fundamental Principles and Concepts Relating to Executors and Trustees’ Accounts” (1983), Estates and Trusts Quarterly 146), the duty of an Estate Trustee in keeping accounts is said to include the duty:

1.                  To keep clear and accurate accounts of the estate, rendered at appropriate intervals to the beneficiaries;

2.                  To keep the accounts distinct from other accounts;

3.                  To retain supporting documents for all accounts;

4.                  To produce to any beneficiary the accounts when requested. Income or revenue beneficiaries are entitled to have accounts at reasonable intervals; accounts must be presented to residuary beneficiaries when entitled to possession;

5.                  To make all beneficiaries fully aware of their rights;

6.                  To disclose any and all breaches of trust;

7.                  To allow all beneficiaries adequate time to investigate the accounts;

8.                  To ensure that all beneficiaries have competent, independent advice in reviewing the accounts; and

9.                  To notify all interested beneficiaries of any court audit.

In Rooney, the court held that a release signed by a beneficiary was not a bar to compelling a passing of accounts. The beneficiary was not advised to obtain independent legal advice when reviewing the trustee’s accounts, and the accounts did not disclose that there were double charges for the trustee’s work made against the estate, or that the solicitor charged more for legal and trustee’s services than would arguably be allowed on a quantum meruit basis. As such, there was a breach of one of the obligations associated with keeping accounts. Furthermore, the release was not a fully informed one. Accordingly, it was not enforceable as against the beneficiary.

Thank you for reading.

Paul Trudelle