In Jury v Rodogzinski 2021 BCSC 2241 the court removed the executor for a perceived conflict of interest where the executor had received the bulk of the estate by way of an inter vivos transfer prior to death, and then was to also receive an equal share of the residue.
The beneficiaries successfully argued that the executor was in a conflict of interest as they asserted that the true intention of the deceased was that all of the beneficiaries would share equally and that under that false impression transferred the real property to the executor two weeks after the will was signed.
The Law
It has been held in a number of cases that an executor may be removed when involved or potentially involved in litigation against the estate in a personal capacity.
In Weisstock v. Weisstock, 2019 BCSC 517
It has repeatedly been held that a conflict of interest may disqualify an executor from acting in that capacity: Re Becker (1986), 57 O.R. (2d) 495 (Ont. Surr. Ct.); Thomasson Estate (Re), 2011 BCSC 481; Stevens v. Whittaker, 2012 BCSC 1188; Ching Estate (Re), 2016 BCSC 1111. Such a conflict may arise if the executor has or may have a claim against the estate or if the estate has or may have a claim against him or her.
In particular, courts have exercised the authority to remove or pass over an executor where there was a dispute over an inter vivos gift made by the deceased to the executor before death.
In Re Becker, 1986 CanLII 2596, 57 O.R. (2d) 495 (Surr. Ct.) the deceased named four persons as executors. One of them, the respondent, purportedly received an inter vivos gift of $107,000 in guaranteed investment certificates shortly before the testator’s death.
The three other named executors brought an application seeking to have the respondent passed over as an executor on the basis that the estate had a claim against him to set aside the gift.
The court granted the order, stating at pp. 6 and 8 (CanLII):
In. It is self-evident that the respondent, in his capacity as executor, cannot conscientiously (as a plaintiff) attack the gift and the transfers of securities to himself while at the same time maintaining in his personal capacity that the gifts and transfers were proper. That will not be a potential conflict; it will be actual…
In Thomasson Estate (Re), 2011 BCSC 481 it was ordered that one of the executors named in a will should be passed over as trustee because he had received an inter vivos transfer of property from the testator, his father.
The beneficiaries of the estate, the testator’s other children, brought the application to have him passed over as trustee on the basis the beneficiaries claimed the property he received in the inter vivos transfer belonged to the estate.
The court noted that courts are hesitant to interfere with the testator’s right to nominate an executor but held that the potential for conflict on the part of the proposed executor was sufficiently disabling that he ought to be passed over.
In Ching Estate (Re), 2016 BCSC 1111, Justice Affleck ordered that an executor be passed over due to a conflict of interest where the named executor, one of the testator’s daughters, applied to prove the will in solemn form and confirm her appointment as trustee. Her sister, a beneficiary, opposed the application on the basis she had commenced an action against the executor to recover an asset the sister claimed was part of the estate. The executor had received the asset from the testator through an inter vivos transfer before her death.
The executor claimed the property was a gift in recognition of continuing assistance she had given to her parents for their medical care.
Without commenting on the merits of the asset recovery action, Justice Affleck found the circumstances placed the executor in a “disabling conflict of interest”.
He said at para. 23 the executor is put in difficult circumstance “when she defends her right to retain assets as her own when there is a dispute over whether they belong to the estate. She cannot perform her duty to claim assets for the estate while asserting the same assets belong to her.”
