Trustees Must Not Co-Mingle or Misuse Estate Funds For Their Own Purpose

trustess not co mingleTrustees must not co mingle or misuse estate funds or assets  for their own purposes.

It is trite law that trustees are fiduciaries and must not personally use, profit from, or co-mingle estate funds with their own.

If a trustee has mixed his/her own funds with the funds being held
for another, all of the property must be taken to be the other’s property until the trustee is able to prove what part of it is his/her own: Widdifleld on Executors and Trustees, above, at p. 13-2; Norman, Re, [1951] O.R. 752, [19521 1 D.L.R. 174 (Ont. C.A.) at p. 5; Cook v. Addison (1869), L.R. 7 Eq. 466 (Eng. Ch. Div

It is an “inflexible rule of the Court of Equity” that a fiduciary must not make a profit or to
put himself/herself in a position where his/her interests and his/her duty conflict unless the trust
instrument expressly so provides: Simone v. Cheifetz, [1998] O.J. No. 3267, 74 O.T.C. 18 (Ont.
Gen. Div.) at para. 47, citing Bray v. Ford (1895), [1896] A.C. 44 (U.K. H.L.); Bikur Cholim

Jewish Volunteer Services v. Langston, [2007] O.J. No. 3667,160 A.C.W.S. (3d) 921 (Ont. S.C.J.), at paras. 30 and 31. As a fiduciary, an attorney for property is not entitled to exercise that power for his or her own benefit unless expressly authorized to do so: Howlader v. Alamgir, [2006] O.J. No. 2575,149 A.C.W.S. (3d) 275 (Ont. S.C.J.)

The trustee, not the beneficiaries, bears the onus of establishing that the management and disbursement of funds is consistent with the terms of the trust: Maintemp Heating & Air Conditioning Inc. v. Momat Developments Inc. (2002), 59 O.R. (3d) 270, [2002] O.J. No. 2722 (Ont. S.C.J.).

A trustee who improperly enjoys the benefit of trust assets without authority and allows non-beneficiaries (e.g. the trustee’s family) to also benefit is liable to the trust for the amounts or the value of the benefits received: Waters’ Law of Trusts in Canada, above, at p. 877; Bikur Cholim Jewish Volunteer Services v. Langston, above, at paras. 13 to 16 and 38, affd (2008), 90 O.R 3d) 673, [2008] O.J. No. 1582 (Ont.

Trevor Todd

Trevor Todd is one of the province’s most esteemed estate litigation lawyers. He has spent more than 40 years helping the disinherited contest wills and transfers – and win. From his Kerrisdale office, which looks more like an eclectic art gallery than a lawyer’s office, Trevor empowers claimants and restores dignity to families across BC. He is a mentor to young entrepreneurs and an art buff who supports starving artists the world over. He has an eye for talent and a heart for giving back.

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