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

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In the August 2011 edition of the STEP Journal, Natasha Kapp writes on the duties owed by a departing trustee to his or her successor.  Kapp makes the following observations:

• The "fundamental duty of a trustee upon resignation or removal is to surrender the trust property under their control;"
• This duty encompasses a further duty to "cooperate fully and actively with the new trustee by making all relevant documents and correspondence available and to answer all reasonable questions";
• This duty is not satisfied by prior performance of such disclosure to the beneficiaries of the trust; the new trustee is entitled to "establish for themselves" what assets compose the trust;
• Failure to cooperate with the new trustee giving rise to the assistance of the Court could well attract full indemnity costs against the departing trustees; the beneficiaries ought not to be in any way penalized by the shortcomings of the departing trustees

In Ontario, removal of trustees is governed by s. 37 of the Trustee Act.

David M. Smith - Click here for more information on David Smith. 

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Further to yesterday’s blog, in the case of McDougall Estate, the beneficiary complained about the trustee’s compensation on the passing of her accounts. In issue was whether the trustee’s compensation should be reduced because she:

1. Made an improper distribution to a charity that was not authorized by the Will.
2. Failed to make an inventory of the contents of the deceased’s house and failed to offer the beneficiary any of the deceased’s personal effects.
3. Pre-took compensation.
4. Paid too much in legal fees out of the estate.

The court found that even though the charitable gift failed because it was not a specified amount or share, the trustee’s interpretation of the Will was not unreasonable and the trustee was not liable for an innocent mistake, made in good faith. She was therefore not required to reimburse the estate and should not have her compensation reduced.

The contents of the house were of little value and had to be cleaned out for sale. The trustee never received any indication from the beneficiary that there was anything of sentimental value that she wished to receive. In the circumstances, the Court found that the compensation should not be reduced for the manner in which the trustee dealt with the personal effects.

The trustee pre-took compensation of 5% of the value of the estate as originally calculated but, after adjustments, she admittedly overpaid herself by $1,163.24. Estate trustees ought not to pre-take compensation unless authorized in the trust document or by approval of the executor’s accounts by the beneficiaries. The proper remedy was payment of interest on the amount pre-taken. Accordingly, the trustee was ordered to repay $1,163.24 plus interest of $360 to the estate.

It was not unreasonable for the trustee to seek legal advice to respond to the inquiries from the beneficiary’s lawyer. While amounts paid to respond to questions about the administration of the estate were not at first instance a proper charge to the estate, such costs were allowed because they were properly incurred by her to respond to the beneficiary’s challenges to her administration of the estate.

The payment of legal fees from the estate that ought to have been paid by the estate trustee is a form of pre-taking of compensation and so the estate trustee was liable for interest on that amount, which was fixed at $70.00.

Sharon Davis - Click here for more information on Sharon Davis. 

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Lawyers frequently take funds into their trust accounts on behalf of clients and others. Usually, it is not difficult to determine to whom those funds belong. However, what happens when the beneficial owner of funds held in trust cannot be identified or located?  

In Ontario, section 59.6 of the Law Society Act permits a lawyer (or licensed paralegal) who has held money in trust for or on account of a person for at least two years to apply for permission to transfer the money to the Law Society of Upper Canada (“LSUC”) if,

1. The lawyer has been unable to locate the person entitled to the money despite having made reasonable efforts throughout a period of at least two years; or
2. The lawyer is unable to determine who is entitled to the money.

The application procedure for transferring the money to LSUC is set out in By-Law 10.

You must complete and file the licensee application form, which will be reviewed by LSUC. Upon completion of the review, LSUC will notify you whether permission to transfer the money to it has or has not been granted.

If permission is granted, you must,

1. Send a trust cheque, made payable to "The Law Society of Upper Canada, in Trust", in an amount equal to the amount of money for which you have received permission to transfer; and
2. Send copies of your financial records relating to the money which you have been permitted to transfer.

Permission to transfer money will typically be subject to the condition that you inform LSUC immediately if you obtain any new information relating to any person entitled to the money that was transferred.

Once the money has been transferred, your liability as trustee or fiduciary with respect to the amount transferred is extinguished.

See the LSUC website for more information.

Sharon Davis - Click here for more information on Sharon Davis. 

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We sometimes hear reports in the news of people going missing. In such circumstances, what happens to their property? One option is for someone to apply to be a committee so that they may have the authority manage the missing person’s property in their absence. 

Pursuant to section 1 of the Absentees Act, R.S.O. 1990, c. A.3, an absentee is a person who, having had his or her usual place of residence or domicile in Ontario, has disappeared, whose whereabouts are unknown and as to whom there is no knowledge as to whether he or she is alive or dead. 

An application may be made by pretty much anyone pursuant to section 2(2):

a)      the Attorney General;

b)      any one or more of the next of kin of the alleged absentee;

c)      the person to whom the alleged absentee is married;

d)      the person with whom the alleged absentee was living in a conjugal relationship outside marriage immediately before the absentee’s disappearance;

e)      a creditor; or

f)        any other person.

Pursuant to section 2(1), the Ontario Superior Court of Justice may declare a person to be an absentee if it is shown that “due and satisfactory inquiry” has been made into their disappearance.

In the case of Kamboj v. Kamboj, 207 CanLII 14932 (ON S.C.) Justice Quinn provides an informative and instructive discussion of what is required to find a person an absentee under the Act. Here are some of the factors to be considered with respect to whether satisfactory inquiry has been made:

a)      Are the applicants the only close relatives of the alleged absentee?

b)      Does the alleged absentee have other relatives or friends in Ontario or elsewhere and, if so, do they have relevant information?

c)      Have inquiries been made at establishments that the alleged absentee frequented?

d)      Have inquiries been made at any clubs, religious, community or social organizations to which the alleged absentee belonged?

e)      Have inquiries been made with the alleged absentee’s family doctor?

f)        Has a notice been published in a local newspaper, containing the alleged absentee’s picture and soliciting information in respect of their whereabouts? Did the disappearance attract media attention?

g)      Did the alleged absentee have a will?

h)      Did the alleged absentee have any creditors? If so, do they have relevant information?

If satisfactory inquiry has been made and the missing person is declared to be an absentee, a committee will be appointed. The committee will have to submit a management plan setting out how they propose to manage the absentee’s property.

If the Court is later satisfied that the person has ceased to be an absentee, it may make a declaration to that effect and set aside the order declaring the person an absentee for all purposes, except for things done in respect of the absentee’s estate while such order was in force.

Sharon Davis - Click here for more information on Sharon Davis.

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I don’t know about you, but I love it when the courts consider novel ideas as a practical solution to a legal problem. That is why the decision of Re D’Angelo Estate, 2010 ONSC 7244 (CanLII) caught my attention.

In D’Angelo Estate, Faust D’Angelo, deceased, resided in St. Catharines, Ontario. In his Last Will, he appointed his son, Emidio, and Emidio’s daughter, Denise as co-executors. His estate was divided equally amongst Emidio and his three surviving siblings. The estate, situate in Ontario, was worth approximately $1.5 Million.

Emidio and Denise, because they both lived in the United States, were obliged to obtain a Foreign Executors’ Bond. The insurer would only issue a bond if a lawyer in counsel’s firm was appointed by the Court as a monitor to supervise the administration of the estate.

The Court allowed the co-executors’ motion and appointed the monitor. Here are a few of the interesting findings leading up to its decision:

·        The co-executors both had standing under Rule 74.15(1)(i) as persons who appeared to have a financial interest in the estate. Emidio had a financial interest because he was a beneficiary. The Court found that the financial interest contemplated by the rule may be direct, indirect or contingent and although Denise was not a beneficiary, she had standing due to her entitlement to claim executor’s compensation, which was a contingent financial interest in the estate.

·        The Court noted that monitors had been appointed by courts in other situations to monitor the business and financial affairs of a charity and under the oppression remedies in the Ontario Business Corporation Act, which makes no provision for a monitor. 

·        The monitor would be an officer of the court and the responsibilities of an officer of the Court are: 1) to act fairly, honestly and impartially as a fiduciary on behalf of all persons having a financial interest; 2) to comply with the powers granted in the order of appointment; and 3) to be accountable to the Court and to the persons in 1).

·        The appointment of a monitor did not require approval or input from the beneficiaries (the motion was made without notice).

·        Pursuant to Rule 1.01(6), it was okay to modify the prescribed forms as circumstances required and so the form of Certificate could be varied to a “Certificate of Appointment of Estate Trustees with a Will and Court-Appointed Monitor”.

I certainly think this case is novel and provides an alternative that could be quite a useful solution in some situations.

Sharon Davis - Click here for more information on Sharon Davis.

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We have blogged previously on section 35 of Ontario's Trustee Act, which relieves a trustee who has committed a technical breach of trust but has otherwise acted honestly and reasonably.  This provision may not be available to a trustee who, confronted with an ambiguous situation, fails to seek the advice and direction of the court, as is the trustee's right under section 60(1) of the Trustee Act.  Section 60(1) states:

60. (1) A trustee, guardian or personal representative may, without the institution of an action, apply to the Superior Court of Justice for the opinion, advice or direction of the court on any question respecting the management or administration of the trust property or the assets of a ward or a testator or intestate.

Justice Cullity describes the applicable principles in Merry Estate v. Plaxton, 2002 CanLII 32496 (ON S.C.) at paragraph 35:

"[35]  On the question of costs, I am satisfied that no criticism can properly be directed at Mr. Meredith for bringing this application. Section 60 of the Act entitles trustees to seek the opinion, advice and direction of the court with respect to the administration of a trust and, in cases where significant doubt exists as to the scope of their powers and responsibilities, they may not be protected under section 35 if they fail to do this. Although such applications must not be made frivolously – and not merely to relieve applicants from making decisions that are part of their responsibilities under the terms of the trust - they are entitled to have their costs paid out of the trust property if, in the opinion of the court, the application was properly brought. I believe this is such a case."

Merry Estate v. Plaxton also contains a discussion of a trustee's right of indemnity with respect to costs properly incurred, and the relationship between this right of indemnity and litigation cost awards for trustees from trusts.  In that application for the court's advice, the trustee Mr. Meredith was awarded full indemnity for his legal expenses in bringing the application.  

Have a great day,

Chris M. Graham - Click here for more information on Chris Graham.
 

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In Nolan v. Kerry (Canada) Inc., 2009 SCC 39 the Supreme Court of Canada considered, inter alia, when costs can be awarded out of a trust fund in the context of a pension plan dispute regarding the employer’s obligations. The pension plan contained defined benefit (“DB”) and defined contribution (“DC”) components.   The CA Employees Pension Committee (the “Committee”) sought to have funds paid into the pension fund to the benefit of the DB members only.

In considering when costs are payable out of a trust, the Court noted that there were three categories of cases in the wills and estate context: 1) Where trustees apply to a court to construe the terms of the trust deed so that they may determine the proper administration of the trust; 2) similar cases where beneficiaries of the trust apply rather than the trustees; and 3) where a beneficiary makes a claim which is adverse to other beneficiaries of the trust. In the first two cases costs may rightfully be paid from the trust fund. However, costs will not be paid from the fund in cases that fall under the third category.

The key question was whether the litigation was adversarial or whether it was aimed at the due administration of the trust. Adversarial claims did not qualify for a costs award from the trust fund. In Nolan v. Kerry the litigation was adversarial in nature because it was ultimately about the propriety of the employer’s actions and because the Committee sought to have funds paid into the pension fund to the benefit of the DB members only. The employer was successful and there was no reason to penalize it by diminishing the pension fund surplus, thereby reducing its opportunity for contribution holidays.

The Supreme Court of Canada affirmed the decision of the Ontario Court of Appeal in favour of the employer. The Committee was not entitled to its costs out of the pension fund and costs were ordered against it as the unsuccessful party.

Sharon Davis - Click here for more information on Sharon Davis.

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The past two years saw Wall Street virtually melt down.  The global economy coughed and sputtered, trade was disrupted, general panic ensued.  Now it appears that a group of significant countries may default on their respective debts, starting with Greece, then Spain, Italy, Ireland, Portugal.  The risk appears to be that the financial structures of these countries will collapse like dominos: first their creditworthiness ratings get downgraded, one country after the other, raising the cost of borrowing to finance debt payments to the point where they default, and one country's collapse will trigger a similar process in the next. 

This could be spreading though the global financial system like "ebola", causing a deeper crisis.  Britain may be hit.  Asia is already seeing market fluctuations.  Not to be overly dramatic, but the National Post headline "Greek debt crisis sweeps all before it" pretty much describes the news chatter.  Canada has already been affected. 

This may have professional relevance for the estates and trusts bar.  Events like this often seem to involve rapid exchange rate fluctuations.  It may be a good time to ensure that trustee clients, particularly those holding assets denominated in foreign currency, have been advised or reminded of their obligations to invest trust property in accordance with section 27 of the Trustee Act (the Prudent Investor Rule), and that exchange rate fluctuations could be seen by a court as being relevant to their management decisions.  A court might require a trustee to indemnify the beneficiaries to the extent of a loss due to exchange rate fluctuations, if the court finds the standard of care defined in section 27 has not been met.

Of course, mere lawyers can neither advise (or even calculate) the prudent level of exposure, nor can we predict fluctuations.  Anyone who can predict the exchange rate fluctuations would not need to practice law.   But we can point out the Prudent Investor Rule and draw attention to the potential risks that exchange rate fluctuations pose, so clients can decide for themselves.

Regards,

Christopher  M.B Graham - Click here to learn more about Chris Graham.

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In today’s blog I will touch upon the rule in Re Hallet’s Estate*.  Tomorrow’s blog will touch upon the rule in Clayton’s Case. The rules stem from situations where a trustee mixes trust funds with their own funds or with a different trust’s funds. The rule in Re Hallett's Estate applies where trustees mix trust funds with their own funds.

The principle was enunciated by the court in the case of Re Hallett's Estate (1879), 13 Ch. D. 696 (CA) and is known as the rule in Re Hallett's Estate. The rule states that where a trustee mixes trust money with his or her own money in a bank account and then withdraws money from that account, it is assumed that the trustee first took out his or her own money rather than money belonging to a trust beneficiary. It may be seen that the rule in Re Hallett's Estate is based on the assumption that trustees are honest and act accordingly. Even if they do mix trust funds with their own money, it is not to be presumed that this mixture was intended to defraud the trusts of those funds.

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As I was recently researching the duty of trustees, I stumbled upon a term that I might fully have expected to have found in a Dr. Seuss book rather than a legal text. I shall use it in the context in which it appears, as a subject title, although I doubt this will help you figure out what it means:

Dishonourable duty to “gazump” 

I found the whole passage so fascinating that I shall reproduce it for your enjoyment and potential enlightenment:

“Where trustees who have entered into negotiations for the sale of trust property receive a subsequent higher offer from another party they should at least probe the subsequent offer irrespective of questions of commercial morality which might have led a vendor who was not a trustee to close the deal with the original purchaser. Nevertheless, the trustees retain such a discretion as will allow them to act with proper prudence, and may pray in aid the commonsense rule underlying the old proverb “A bird in the hand is worth two in the bush”; so that there may be cases in which they could properly refuse a higher offer and proceed with a lower one.”

Underhill & Hayton, “The Law of Trusts and Trustees” (London: LexisNexis Butterworths, 2007) at page 716

Click here for the Wikipedia definition of gazumping and its opposite, gazundering (just for fun). Here is a link to a gazumping reference in a 2006 judgment, just in case you don’t believe me  - see paragraph 45. 

There are a couple of lessons to be learned here. The first is that not all legal terms need be Latin or pretentious-sounding. The second is that while the law may apparently foist a dishonourable duty upon (poor unsuspecting) trustees, if they happen to be holding a bird in one hand they will probably be okay. 

I’ll bet every Who in Whoville already knew that.

 Sharon Davis

Sharon Davis - Click here for more information on Sharon Davis.

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The Leona Hemsley's estate saga continues.

Last month, three animal protection groups filed a petition requesting that the court appeal a previous decision that allowed the trustees of Helmsley’s estate sole discretion to determine how charitable trust funds would be distributed. Rick Bickhram’s previous blog provides a background to this decision.

The animal rights groups allege that Helmsley’s money is not being spent the way she intended and contrary to her expressed intentions to care for the welfare of dogs. The groups object that only $1 million of the $136 million paid out to charitable organizations this year went to organizations that assist with animal welfare. A New York Times article outlines some of the hurdles the animal rights groups face. We will see how this new development plays out.

Of course, Helmsley’s Will caught the media’s attention because she left $12 million to her Maltese, Trouble. Yet, Trouble’s fortune seems small compared to Gunter III, a German Shepherd who was left $80 million by Karlotta Liebenstein, an Austrian countess. If you think that’s unusual, this blog post outlines these two dogs’ fortunes and some additional “interesting” Will bequests. Estate law is almost never boring.

Thanks for reading,

Diane Vieira 

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The recent decision of Pachaluck Estate v. DiFebo provides a useful example of the costs exposure that parties can face on an application to pass accounts.  

In this case, a beneficiary had objected to the compensation the estate trustee had taken.  The court agreed to an extent – it ordered compensation be reduced (by about $9,700), but not by as much as requested by the beneficiary.    

The court then had to decide the issue of costs.  The executor argued that he had been prudent in his administration of the estate and while the beneficiary was successful in a partial reduction in compensation, she was unsuccessful with regard to most of the objections she had raised. The executor sought fully indemnification for his costs from the estate and argued that the beneficiary should receive partial indemnity costs. 

The beneficiary argued that because she was successful in obtaining a reduction in compensation and because she was unable to get a full accounting until the court had ordered one be produced, her costs should be fully paid by the executor.

The court found that there was a mixed result in its determination of the application to pass accounts.  While the court  agreed the executor had acted in good faith, a reduction in compensation was nevertheless ordered and the court was satisfied that a full accounting would not have been provided absent a court order.

The court was critical of the fact that neither party had served an offer to settle and found that to the extent the estate trustee and beneficiary were entitled to receive costs from the estate it should be on a reduced basis.  Ultimately, the court awarded each less than half the costs that were sought.  

This case is a reminder of some of the perils involved in pursuing a contested passing of accounts.  To begin with, both parties were stuck paying more than half the costs each had incurred personally and, as such, were "out of pocket" in the litigation.  Second, the compensation that was repaid to the estate as a result of the litigation was less than the legal fees that ended up coming out of the estate to reimburse the parties, which begs the question of whether the beneficiary was worse off for pursuing the litigation in the first place.  

Have a great day!

Megan F. Connolly

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In Maryland, legislation was recently enacted that allows pet owners to establish trusts for their pets, making it the 40^th state to allow pet trusts.  Previously, people could not leave gifts to pets because, at law, pets were chattels and could not inherit property. 

There are some limitations to the law.  To begin with, people can only leave funds for pets living at death – they are not allowed to provide for “future generations” of animals.

In addition, while the pet owner must name a trustee for a trust, it must also name a caregiver for the pet (the caregiver and trustee can be one and the same).  If, after the pet owner’s death, the pet is not properly cared for or the trust funds are not being administered appropriately, the law will provide that an outside party can apply to the court to get the trustee or the caregiver replaced. 

The pet owner should also specify to whom the remainder of the trust should go when the pet dies (the article suggests that the caregiver or trustee should not be left the remainder, in case it becomes a disincentive to keep the pet alive). 

The law is set up so as to avoid the type of litigation that ensued after Leona Helmlsey’s death (Helmsley, as you might remember, left $12 million in trust to her dog Trouble, while leaving nothing to two of her grandchildren).  While it does not specify a maximum that a pet owner can leave in trust, it does provide the funds should be sufficient to care for the pet.  It also gives the court the discretion to vary the trust if a beneficiary challenges it as being excessive. 

I can’t say the trend towards providing for pets in an estate plan is all that surprising, given how attached people can be to their pets.   

Have a great day!

Megan F. Connolly  

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Ker Estate v. Stevenson, a recent decision from the Ontario Court of Appeal, considered whether an annuity left to a beneficiary under a will could be encroached upon by a judgment creditor. 

In this case, the deceased directed that half the residue of her estate be used to purchase a non-commutable life annuity for her daughter.  On the daughter’s death, what remained in the annuity was to be used to purchase a non-commutable annuity for the deceased’s grandson. 

After the deceased’s death, the daughter had been involved in litigation which resulted in a judgment against her.  Prior to the annuity being purchased, the judgment creditor sent a notice of garnishment to the executors requiring them to satisfy the judgment.

The executors sought the court’s direction as to, in part, whether the share of the deceased’s daughter could be encroached upon to satisfy the judgment. 

The motions judge found that the funds available for the daughter’s benefit vested in her on the deceased’s death and were available to satisfy the judgment. 

The grandson (who had an interest in the remainder of the annuity) appealed the decision on a number of grounds, a major one of which was that the court erred in finding that the annuity vested in the daughter on the deceased’s death. 

The Court of Appeal examined the nature of an annuity and, in its review of the jurisprudence, found that it could best be characterized as a legacy.  The fact that it was “non commutable” was not sufficient to persuade the court it should be characterized otherwise.  Moreover, the Court pointed to case law which suggested that the beneficiary of an annuity under a will had the right to call on the payment of the cash value of the annuity prior to its purchase. 

As a result, it affirmed the motions’ judge’s finding that the right to the annuity vested in the daughter at the deceased’s death and could be encroached upon by the judgment creditor. 

Have a great day!

Megan F. Connolly 

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The recent decision of Pachaluck Estate v. DiFebo is a useful illustration of when the court is willing to reduce compensation awarded to the trustee for the administration of a simple estate. 

The main assets of the estate were the deceased’s condominium and several bank accounts.  Her will provided that the condo would be sold and its proceeds would be divided amongst several grandchildren; cash bequests would be made to several individuals; and the residue of the estate would be divided amongst the deceased’s two daughters. 

When the administration of the estate was near completion, the estate trustee brought an application to pass accounts.  One of the residual beneficiaries objected to the accounts in part on the basis that the compensation claimed was over and above that what was warranted in the circumstances. 

In determining what compensation should be allowable, the court considered the five factors articulated in Re Toronto General Trusts and Central Ontario Railway:

(a)   magnitude of the trust;

(b)  care, responsibility, and risks assumed by the fiduciary;

(c)   time spent by the fiduciary carrying out obligations;

(d)  skill and ability required and displayed by the fiduciary; and

(e)   results obtained and degree of success associated with the efforts. 

The court found that while the five factor were useful guidelines, the analysis should be fact specific and sensitive to the specifics of the estate administration in question.  The court also found that the application of a percentage in determining compensation should not be set in stone but should be fact specific. 

In the end, the court decided to reduce compensation.  In considering the sale of the condo, the court found that the administration of the estate with respect to this asset was uncomplicated and straightforward.  With respect to the cash bequests, the court also found that distributing them was simple.  As a result, it ordered the compensation associated with the sale of the condo and the distribution of the proceeds to be reduced to 1.5% while it ordered compensation related to the balance of the estate reduced to 2.0%. 

Have a great day!   

Megan F. Connolly 

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My blog today is the last in my series this week on protecting a trustee from potential liability.

A trustee may be protected from potential liability based on the conduct of the beneficiaries themselves or by having sought the assistance of the Court. 

If a beneficiary consents to, or concurs in, a breach of trust prior to it being carried out, or he releases the trustee from liability, or in some other way acquiesces in the breach after it has been carried out, he or she may not subsequently claim from the trustee any compensation to the trust for the loss arising. It is the beneficiary’s personal conduct which bars him or her from making such a claim. A beneficiary, who has instigated, requested or consented to a breach, may possibly be required to indemnify the trustee to the extent of the beneficial interest.

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Today’s blog will continue my series this week on protecting trustees from potential liability.

A trustee may incur personal liability arising from his or her administration of the trust. The provision or existence of a release and/or indemnification in favor of the trustee may protect, limit or exonerate the trustee from liability.

With respect to a trustee’s accounts (accounting) for the administration, releases may be sought by the trustee and provided by the beneficiaries in conjunction with a Court order passing the accounts.   Alternatively, the beneficiaries may provide the trustee with a release in lieu of compelling the trustee to pass his or her accounts in Court. Amongst other considerations, when seeking a release from the beneficiary, a copy of the accounts should be provided, either in an informal format or formal format, for the beneficiary’s benefit.  

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A trustee, whether incoming or outgoing, needs to be aware of and consider his or her potential liability as trustee and over the administration of the trust. The trustee’s conduct may be protected, limited or exonerated by the terms of the trust, statute, an Order relieving the trustee of liability, the existence or provision of releases or indemnities, a passing of accounts, the conduct of the beneficiaries, whether indirect or direct, and/or the assistance of the Court. 

My blogs this week will, to some extent, touch upon some of the ways that the potential liability of a trustee can be protected, limited or exonerated.

To begin with, a trustee, whether incoming or outgoing, ought to carefully review the terms of the trust document as the trust document may contain provisions that impact on the potential liability of the trustee.

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What does an executor do?

The first responsibility is to tend to funeral arrangements and then to gather up all the information relevant to the Estate. This information includes the ownership and value of assets, as well as the nature of all Estate liabilities. These responsibilities need to be taken seriously. 

Some other duties include: make provisions for dependants; notify various government agencies of the deceased's death; collect income from assets; decide about investments; seek advice as required.  The executor’s role is similar to that of a trustee: both owe a duty to the beneficiaries. 

When one plans his or her Estate and prepares a Will, it is useful to consider the attributes of a successful executor.  Some questions might be:

• Is the person organized?
• Does the person have financial skills? 
• What is the demeanour of the person who is being considered as an executor?

A recent British article asks more questions. One point, among many, is that “Honesty and conscientiousness are important, but if you are appointing more than one executor - and often that's a good idea - they also need to be team players.” 

Each situation is different but the hard and soft skills of a potential executor are likely useful considerations.

Examples abound to illustrate what might go awry. Take the Estate of the renowned violinist, Isaac Stern. In 2004, the beneficiaries of the Estate were disappointed when the executor failed to include the value of the deceased's  New York apartment in the calculation of the Estate's value. This decision resulted in a shortfall of funds to meet the Estate’s liabilities. Legacy items, including musical instruments, were apparently sold at auction to the beneficiaries' collective dismay.

Choose your executor(s) wisely.

Enjoy your Thursday.

Jonathan Morse

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The British lawyer and author, John Mortimer, died on January 16, 2009. During his 85 years he produced more than 50 novels, biographies and memoirs. Of course he was best known for the creation of Rumpole of the Bailey.

Mr. Mortimer had an active professional life, and by many accounts, an active private life as well. He was first married in 1949: apparently he noticed his first wife while he rode a horse and peered over a hedge.  After divorcing around 1970, he married again in 1972.  Both wives were named Penelope, although he called his second wife Penny.

While the deceased lawyer may have organized his affairs with the requisite estate planning in place, the experience in Canada might suggest that Mr. Mortimer’s Estate will encounter some challenges not least of which may relate to copyright issues.

I refer to Lucy Maud Montgomery who died on April 24, 1942. The creator of Anne of Green Gables left a legacy of work and maybe just a few headaches for her heirs. 

After all the copyright kinks were ironed out, it seems that Anne of Green Gables has a bright future ahead of her.  With luck, and the combined efforts of lawyers and artists, Rumpole will experience similar success and longevity.

Thank you for reading.

Jonathan Morse