Removal of Executor/Trustee For Conflict of Interest

Removal of Executor/Trustee For Conflict of Interest

As a BC estate lawyer, I am often asked to remove an executor/trustee. Re Ching 2016 BCSC 1111 is one of several cases where the courts have indicated their reluctance to remove an executor for a perceived conflict of interest. The executor/trustee was however removed and replaced as the conflict of interest was “disabling” to her performance as trustee as opposed to the interests of others.

[22]        The authorities indicate that even a “perceived” conflict of interest between an executor’s personal interests and her obligation to administer the trusts in the will in the interests of the beneficiaries may cause this court to intervene to appoint a new executor or an administrator to avoid even the appearance of conflict. In para. 53 of her response to civil claim filed in the asset recovery action Gini alleges that:

[24]        The executor makes several arguments to support her continuation in that role. She submits, firstly, that the estate is complex and that she has “the most knowledge” of its assets among the three sisters. In my view, this consideration cannot outweigh the conflict between her obligation as executor to call in the assets of the estate and her own interest in asserting that significant assets, that are alleged in the asset recovery action to belong to the estate, actually belong to her.

[25]        Secondly, she submits the testator’s choice of executor ought to be respected. I accept that is a compelling factor and this court has often expressed its reluctance to remove an executor when a conflict of interest is alleged.

[26]        In Parker v. Thompson (Trustee), 2014 BCSC 1916, Hinkson C.J.S.C. at para. 37 wrote the following:

[37]         I accept the principles pertaining to the removal of an estate trustee set out by Madam Justice Nolan in Haines v. Haines, 2012 ONSC 1816 at para. 10 as equally applicable to the removal of the trustee:

In Johnson v. Lanka, 2010 ONSC 4124, (2010), 103 O.R. (3d) 258 at para. 15, Pattillo J. summarized the principles that should guide the court’s discretion in deciding whether to remove estate trustees:

(1) the court will not lightly interfere with the testator’s choice of estate trustee;

(2) clear evidence of necessity is required;

(3) the court’s main consideration is the welfare of the beneficiaries; and

(4) the estate trustee’s acts or omissions must be of such a nature as to endanger the administration of the trust.

[27]         The outcome of each application for the removal of an estate trustee will depend on its own facts. The evidence satisfies me that the administration of the estate is endangered if the executor continues to be faced with the conflict of interest inherent in that role.

[28]        Thirdly, the executor submits she has not been guilty of any misconduct in her duties as executor. I make no finding on evidence before me that there has been misconduct but, in my view, even without misconduct the conflict is egregious.

[29]        The executor, lastly, submits that she had little opportunity to administer the trusts before she was prevented from doing so by the notice of dispute. The evidence is that the executor had taken a number of steps to administer the trusts and again those steps illustrate the conflict which has arisen.

[30]        I conclude that Gini, so long as the asset recovery action continues, cannot perform her role as executor without inevitably suffering from a disabling conflict between her own personal interests, as she sees them, and the interests of others.  

[31]        There will be an order that Solus Trust Company Ltd. be appointed administrator of the estate of the testator pending the outcome of the asset recovery action; an order vesting the assets of the testator in Solus Trust for that purpose; an order that Solus Trust is entitled to be paid its fees and disbursements for its administration services in accordance with Schedule A attached to these reasons; and, an order that Pamela and Gini are each entitled to be paid their respective costs of the present application on a full indemnity basis from the estate.

Removing and Replacing Executors and Trustees

This video is on removing executors and trustees. Personally, I think being an executor is like being a fire hydrant on a street of dogs. You can never, ever get enough appreciation. Unfortunately, it seems to attract a lot of heat. Now there are good executors and there are bad executors. But the fact that you don’t like the executor or you can’t get along with the executor really is not going to be sufficient to remove that executor.

At common law, it has historically been very difficult to remove an executor. But more recently, the courts I think have adopted a more flexible approach. Therefore, you can remove an executor for such reasons as dishonesty or total impasse where nothing is happening whatsoever and things along that line. It’s very difficult. It’s something you’re going to have to consult an expert on and ultimately, it has to be resolved in favour of getting the estate distributed to the proper heirs.

Executor Trustee Removed For Delay

Executor Trustee Removed For Delay

Re Collett Estate 2017 BCSC 473 is the most recent of a judicial trend to remove an executor trustee for delay in the distribution and finalization of an estate.

In Collett the deceased died in 2008 and was removed as a result of the inordinate delay in finalizing a simple estate in a timely manner.

In Dirnberger Estate, 2016 BCSC 439, this Court wrote as follows in deciding to remove an executor as a result of his delays:

[13] The duty of an executor is to settle the affairs of the deceased and to distribute the estate in accordance with the terms of the will in a timely manner. Mr. Chase has failed to do this.

[14] I have concluded that Mr. Chase must be removed as trustee. I have reached this conclusion for two reasons. His actions demonstrate that he lacks the necessary capacity to act as trustee. . . . There is as well a want of reasonable fidelity.

[15] With regards to the first reason, this is a simple estate that has not been distributed more than four years after probate.

[16] In Levi-Bandel v. McKeen, 2011 BCSC 247, Justice Butler stated at paras. 21 and 23:

[21] . . . it is not only an act of misconduct that can be grounds for removal of a trustee. A failure to act can amount to grounds for removal . . . .

. . .

[23] . . . I have little difficulty in concluding that [the executor’s] inaction and her intransigence caused unnecessary delay. Her refusal or reluctance to proceed with the administration of the estate amounts to a want of reasonable fidelity and a failure to carry out her duties.

 Justice Butler further stated:

19      The test for removal of an executrix or trustee is not contentious. The leading authority in British Columbia remains the decision in Conroy v. Stokes, [1952] 4 D.L.R. 124 (B.C. C.A.). In Conroy, the Court of Appeal considered whether it was expedient to remove one trustee and appoint a replacement when some of the beneficiaries were dissatisfied with the way the trustee was handling the estate. The court confirmed at 126-127 that the main test for removal of a trustee is the welfare of the beneficiaries:

In Letterstedt v. Broers (1884), 9 App. Cas. 371, their Lordships of the Judicial Committee held that the main principle upon which the jurisdiction of Courts of Equity has been exercised to remove old trustees and substitute new ones in cases requiring such a remedy, is the welfare of the beneficiaries of the trust estate. 

20      In Letterstedt v. Broers [(1884), L.R. 9 App. Cas. 371 (South Africa P.C.)], the court noted that it is not every act of misconduct that should result in removal of a trustee, only acts or omissions which endanger the trust property or show “a want of honesty or a want of proper capacity to execute the duties, or a want of reasonable fidelity.”

21      However, it is not only an act of misconduct that can be grounds for removal of a trustee. A failure to act can amount to grounds for removal. In Scott v. Scott, [1991] 5 W.W.R. 185 (Sask. Q.B.), Baynton, J. relied on the inherent jurisdiction of the Saskatchewan Court of Queen’s Bench to remove a trustee where the actions of one trustee in refusing to sign cheques or provide an accounting produced a stalemate amongst the trustees. His refusal was motivated by his wish to be compensated by the trust for caring for one of the principals of the trust. He refused to sign cheques or provide the accounting until he was paid. The court found that the trustee’s deliberate failure to act placed him in breach of his fiduciary duties to the beneficiaries of the trust.

Proper Estate Expenses

Double Costs and Offers to Settle

Re Vince Insurance Trust 2016 BCSC 1992 reviewed the law as to what constitutes proper estate expenses such that the executor would be entitled to be reimbursed for same. It is a question of fact in each case.

The application for the interim distribution was made under section 155 of the Wills, Estates Succession Act, S.B.C. 2009, c.13, ( and Rules 8 — 1, 14 — 1, and 22-1 of the Supreme Court Civil Rules for the payment of an interim distribution of $250,000 from the estate of Patricia May Burns (“Patricia”) to the defendant Brent Arthur Dale (“Brent”).

29      Trustees are entitled to be indemnified against all reasonable costs and expenses they incur as trustees: Geffen v. Goodman Estate [1991] 2 S.C.R. 353. This is reflected in s. 95 of the Trustee Act, R.S.B.C. 1996, c. 464, which provides, in material part, that a trustee “may reimburse himself or herself, or pay or discharge out of the trust premises, all expenses incurred in or about the execution of his or her trusts or powers”.

30      The general test to determine whether an expense is properly incurred, and therefore recoverable, is described in Donovan W.M. Waters, Mark R. Gillen & Lionel D. Smith, Waters’ Law of Trusts in Canada, 4th ed. (Toronto: Thomson Reuters Canada Limited, 2012) at 1209 as:

whether the expense incurred arose out of an act within the scope of the trusteeship duties and powers, whether in the circumstances it was reasonable, and whether it was something that his duty as the trustee required him to do. 

31      The application of this test, generally speaking, would disentitle a trustee to indemnification for expenses arising out of his or her own misconduct: Tebbs v. Carpenter (1816), 1 Madd. 290, and expenses that he or she voluntarily assumed: Waters’ Law of Trusts at 1210. The matter is more complicated, however, in cases where a strict application of the test would preclude indemnity but where the trust benefited from the incurred expense.

32      It has been observed that in such circumstances, it would be reasonable “to indemnify the trustees on the ground that the beneficiaries are unjustly enriched”: Albert H. Oosterhoff, “Indemnity of Estate Trustees as Applied in Recent Cases” in Megan Connolly & Anne E.P. Armstrong eds, Ontario Estate Administration Manual, (Toronto, Thomson Reuters Canada) (WL). Similarly, the authors of Lewin on Trusts, 17th ed. (London: Sweet & Maxwell, 2000) at 539, express the view that where a trustee has acted in good faith and has incurred costs in a transaction benefiting the trust estate, he or she may be entitled to indemnification even where the transaction was unauthorized:

In general, a trustee is not entitled to indemnity if he incurs costs or liabilities in a transaction which is unauthorised and without the request or implied assent of the beneficiaries. However, if the trustee acts in good faith, and the transaction benefits the trust estate, he may be entitled to indemnity to the extent that the transaction benefits the trust estate, though whether the indemnity is a matter of right rather than of discretion of the court is not clear.

[Emphasis added]

33      Ultimately, what is regarded as a properly incurred and therefore recoverable expense is “a question of fact in the circumstances of each particular case”: Waters’ Law of Trusts at 1209. The applicable principle I draw from the foregoing authorities is that there is no absolute prohibition against the indemnification of a trustee for expenses incurred as a result of acts beyond the scope of the trust (including voluntary acts) in circumstances where the denial of indemnification would result in unjust enrichment of the beneficiaries.

Removed Executor Gets No Fees

Removed Executor Gets No fees

Watson v Strong 2016 BCSC 1897 dealt with a passing of accounts claim for executor’s fees by a removed executor  that was rejected by the court. The court instead awarded %4.5 fees on an interim basis to the executor who replaced the removed executor, with a further .5% fees when the estate is finalized.

The court outlined the criteria for determining executor’s remuneration and then listed all the reasons why the removed executor was not entitled to any fees.

45      Executor’s remuneration is contemplated by the will and by s. 88 of the Trustee Act, R.S.B.C. 1996, c. 464. The executor is entitled to a fair and reasonable allowance of a maximum of 5% of the gross aggregate value of all the assets of the estate for his or her care, pains and trouble and his or her time spent on the executorship.

46      The criteria to be considered in determining the executor’s remuneration are as follows:

a) the magnitude of the trust (or estate);

b) the care and responsibility involved;

c) the time occupied in the administration of the estate;

d) the skill and ability demonstrated;

e) the success achieved in the final result (McColl, Re (1967), 65 W.W.R. 110 (B.C. S.C. [In Chambers])).

1. Marian’s claim to Executor’s Remuneration

47      Applying the criteria as required, I have determined that Marian has not applied any skill or ability in her role as executor to justify any executor’s remuneration. She is a major cause of the excessive delay in getting Elwell Street sold, and of the associated legal expenses. I would be illogical to award a fee in light of the unnecessary delay and expense that Marian has caused. Marian says she spent 262 hours taking junk to the dump, arranging for curbside pick-up of junk by the City of Burnaby, and attending the property when the City of Burnaby bylaw inspector attended. The attendance of the bylaw inspector was due to debris on the property. The letter from the City dated September 13, 2013 to Marian and Rick refers to twelve previous Licence Office letters regarding a complaint about a sawmill business being operated on the property. The sawmill business was Gordon’s. The letter goes on to say:

A site inspection conducted on 2013 September 10 revealed: a dismantled portable saw, an accumulation of rough cut lumber, lumber, used building materials, construction debris, pieces of metal, sign, fridge drawer, sink, hand truck, rowing machine, seat from a [sic] automobile, wooden boxes, several pieces of outdoor furniture and various forms of debris stored on the property.

48      The letter states the City requires removal of all of the items listed and the lumber to be neatly stacked.

49      Finally, the City issued a ticket on August 22, 2014 based on the unsightly property. Rick appealed the ticket, but lost. The adjudicator noted that the City worked with the owner’s representative for three years to clean up the property and allowed debris to remain until the property was vacated on May 26, 2014. A second ticket was issued September 26, 2014 for unsightly property. In my view, it was inevitable that the City would take action regardless of Marian having attended the bylaw inspections. The bylaw inspector’s supervisor wanted him to close the file. It was inevitable that the patience of the City would eventually run out and a ticket would be issued. In any event, if Marian had not obstructed the timely sale of the property, the unsightliness issue would not have lingered as long as it did.

50      Marian says she preserved the property and because of her refusal to agree to an earlier sale of the property, the property increased in value and therefore, she should receive a care and management fee. Before being removed as executor, Marian resisted Rick’s attempts to sell Elwell Street. She wanted to buy the property herself, but had no realistic way of doing so.

51      The other beneficiaries wanted the property sold. If the property had been sold earlier, each beneficiary would have received his or her share to invest as he or she wished. Marian’s self-interest conflicted with her duties as executor to act for the benefit of all beneficiaries. I do not consider Marian’s hindering of the sale of the property a point in her favour in her claim for an executor’s fee.

52      Marian’s conduct as executor has resulted in her being removed by court order. That order was based on Marian obstructing the proper administration of the estate. She is responsible for the estate having to spend money on legal fees that would otherwise go to the beneficiaries.

53      Further, she has refused to claim the principal residence exemption (“PRE”) which would save the estate $60,000, $15,000 of which would go into her own pocket. She was only willing to claim the PRE if she were paid $30,000 for executor’s fees and that the estate dropped its claim for special costs. Needless to say, the offer was rejected. Even if I were to award Marian executor’s remuneration for junk clearing and attending at the property during the bylaw inspections, the amount of that fee would be very modest and eclipsed by the $60,000 she is costing the estate by refusing to claim the PRE. Marian’s own legal counsel advised her to claim the PRE and to leave her claim for executor’s remuneration to be determined by the court. Her refusal to claim the PRE is unreasonable. Marian still has the opportunity to act reasonably and claim the PRE because she is within the time limit for re-filing. She testified that “it’s still on the table”, which I take to mean that she may decide to claim the PRE. It is in her own interests to claim the PRE, even if she is not motivated by the interests of the other beneficiaries. If she requires some professional accounting assistance to re-file, Rick, as executor, might consider covering her reasonable accounting fees for this purpose. Such fees would be a reasonable estate expense.

The Duties of an Executor Under a Will

Duties of Executor

Duties of  Executor is an example of one of the many excellent publications that the Canadian bar Dial- A Lawyer library has for free public access.

I have reprinted this article from the said library as it is an excellent summary of the daunting task faced by many executors.

The Dial-A-Law library is prepared by lawyers and gives practical information on many areas of law in British Columbia. Script 178 gives information only, not legal advice. If you have a legal problem or need legal advice, you should speak to a lawyer. For the name of a lawyer to consult, call the Lawyer Referral Service at 604.687.3221 in the lower mainland or 1.800.663.1919 elsewhere in British Columbia.

This script discusses your duties as an executor under a will and what you have to do to probate an estate.

What does it mean to probate an estate?

Probate is the process of getting the court to rule that a will is legally valid. With some exceptions, the estate consists of any land, house, money, investments, personal items and other assets that the deceased owned. The person who died and made the will is called the “testator”.

What is an executor, and what does the executor do?

The executor is named in a will, in general, the executor gathers up the estate assets, pays the deceased’s debts, and divides what remains of the deceased’s estate among the beneficiaries.

How do you confirm that you were named as the executor?

You need to get the original version of the will to check this. If it’s not at the deceased testator’s home, the will may be in a safety deposit box, at the office of the lawyer who drafted the will, or it may be found by a search with the Vital Statistics Agency.

To look in the safety deposit box, phone the bank and make an appointment. Take the key, a death certificate and your own identification. If the will is there and names you as executor, the bank will let you take the will. You and a bank employee will then list the contents of the safety deposit box. You need to keep a copy of that list.

The other thing you can do is search for a wills notice at the Vital Statistics Agency. The testator or the testator’s lawyer may have registered a wills notice with Vital Statistics. This notice tells where the testator planned to keep the original will. If a wills notice was registered, you’ll be able to locate and obtain the original version of the will and confirm that you were named as the executor. For the Vital Statistics Agency office closest to you, call 250.952.2681 or check the Vital Statistics website at

Decide if you want to be the executor

If you haven’t yet dealt with any of the estate assets, you cannot be made to act as the executor. Acting as an executor can be very challenging, and you should only take on this responsibility knowing that the task will be time-consuming and stressful. Once you begin the process of dealing with the estate assets, you’re legally bound to complete the job, and you can only be relieved of your responsibility by a court order.

Consider hiring a lawyer

If you decide to act as the executor, consider whether to hire a lawyer to do the paperwork and advise you of your obligations. If you do, the estate pays the lawyer’s fees. Ask the lawyer how the legal fees will be calculated, whether as a percentage of the estate or on an hourly basis. But because unexpected matters often arise in estates, it may not be possible to get an exact estimate of the fees. It’s a good idea to hire a lawyer for any estate involving the distribution of assets through a will, where a grant of probate is required. For most estates, it’s also a good idea to also hire an accountant to help with the several tax returns that need to be filed, as proper filing of returns and payment of taxes is one of the executor’s responsibilities.

Your first decision as executor may be about funeral arrangements

The funeral is your responsibility, although you’ll want to consider the wishes of the deceased person and their relatives. The funeral parlor will ordinarily order you copies of the death certificate. You may take the funeral bills to the bank where the deceased kept an account. If there’s enough money in the account, the bank will give you a cheque from that account to pay the expenses.

You must also confirm that the will is the deceased’s last will

You can confirm this by checking with the Vital Statistics Agency at the office closest to you. Most lawyers send a wills notice to Vital Statistics for every will they prepare. Vital Statistics will then send you a Certificate of Wills Search. This tells you if there’s a record of the will and where the will is kept. You need this certificate when you apply to the court for probate, if you can’t find the original will, the search results may help you locate it.

Cancel charge cards and protect the estate

You should cancel ail the deceased person’s charge accounts and subscriptions. Also ensure that the estate is protected. Make sure valuables are safe and that sufficient insurance is in place. You should immediately change the locks on the apartment or house, and put any valuable things into storage. As for insurance, most insurance policies are cancelled automatically if a house is vacant for more than 30 days, so ask the insurance agent about a “vacancy permit.”

All potential beneficiaries must be notified

The Supreme Court Civil Rules and the new Wilis, Estates and Succession Act (WESA) require that all beneficiaries (as well as certain family members who would be heirs if there was no will, or who are eligible to apply to the court to change the will) must be given a written notice, plus a copy of the will. This is generally done by the estate’s lawyer.

The next step is to prepare and submit the necessary probate documents

The probate documents are submitted to court to get probate. Usually, you must get probate of the will to handle the deceased’s estate. You’ll also have to pay the probate fees as assessed by the court registry. The deceased’s bank will usually allow you to take these funds out of the deceased’s account.

Be aware that you don’t always have to apply for probate

It depends on the type of assets in the estate. Certain assets can be passed down without requiring probate. Land owned in joint tenancy with another person doesn’t require probate. If the deceased person owned land or a house in joint tenancy with another person, you only have to file an application in the Land Titles Office along with the death certificate. This will register the land in the name of the surviving joint tenant.

Also, probate isn’t required for joint bank accounts or vehicles owned jointly. Again, the death certificate is usually sufficient to transfer these to the surviving joint owner.

In addition, RRSPs and insurance policies, which typically name a beneficiary to receive the proceeds in case of the person’s death, aren’t considered part of the estate, and therefore don’t require probate. You should give the death certificate to any insurance companies and RRSP administrators that the deceased person had plans with.

They’ll want the death certificate before paying money to a beneficiary.

What about stocks and bonds?

If the estate includes securities, such as stocks and bonds, you may have to apply for probate in order to transfer them. You should check with the financial institution or transfer agent involved for each security in the estate because they’ll have different requirements.

Also deal with any pensions the deceased had

If the deceased paid into the Canada Pension Plan, immediately apply to your local CPP office to tell them of the death and obtain any death, survivor or orphan benefits. Most funeral directors can provide you with information and forms regarding CPP death benefits. You should also check with the deceased person’s employer about any benefits available there. If the deceased was receiving an old age security pension or other pensions, you also need to tell those pension offices of the death. Note that any CPP or old age security cheques for the month after the month in which the person died must be returned uncashed.

Certain income tax returns must be filed, and income tax may have to be paid

You need to file tax returns for any years for which the deceased didn’t file a return. If the estate made any income after the date of death (such as rental income or interest accounts), then tax returns will have to be filed for the estate for each year after death, until the estate is wound up or paid out. The estate must pay taxes and obtain a Clearance Certificate from Revenue Canada before the estate can be distributed to the beneficiaries. This certificate confirms that all income taxes or fees of the estate are paid. This is an important step because the tax department can potentially impose taxes that you don’t know about.

Now you can pay the estate’s debts

Depending on the circumstances, you may want to advertise for possible creditors so you can make sure all legitimate debts are paid. This is to protect yourself against creditor claims that arise after you distribute the estate. As the executor, you could be personally liable if you don’t pay the deceased’s debts, includig any taxes owed, before you distribute the estate. You should talk to a lawyer about this.

Be aware of the WiUs Variation Act

The Wills Variation Act allows any child or spouse of the deceased to apply to the court to vary or change the terms of the will. This Act has a six-month deadline (starting from the granting of probate). You should wait for six months to distribute the assets or obtain releases from each potential claimant. Remember that you are responsible if you distribute the assets to the wrong people and could be sued.

Get tax clearance

It’s wise to obtain a tax clearance certificate from the Canada Revenue Agency. This certificate confirms that all income taxes or fees of the estate are paid. This is an important step because the tax department can potentially impose taxes that you don’t know about.

Finally, you’re ready to distribute the estate to the beneficiaries

But before distributing the assets as directed in the will, you should submit a full accounting of the estate’s financial activities and obtain a release from each beneficiary. Your accounting will usually include a claim for reimbursement of expenses you’ve paid yourself. You’ll have to decide if you also want to claim a fee for acting as executor. This fee can be up to 5% of the estate and is taxable income. If you want to claim a fee, the amount you claim should be included in the accounting that you send to the beneficiaries.

Where can you find more information?

• See the booklet “Being an Executor” produced by the People’s Law School, available online through Clicklaw. -at

•     Also see the BC Ministry of Justice’s website on wills and estates at estates.htm. [updated April 2014]

Dial-A-Law© is a library of legal information that is available by:

•             phone, as recorded scripts, and

•             audio and text, on the CBA BC Branch website.

To access Dial-A-Law, call 604.687.4680 in the lower mainland or 1.800.565.5297 elsewhere in BC. Dial-A-Law is available online at

The Dial-A-Law library is prepared by lawyers and gives practical information on many areas of law in British Columbia. Dial-A-Law is funded by the Law Foundation of British Columbia and sponsored by the Canadian Bar Association, British Columbia Branch.

Executor/Trustees Fees

Executor/Trustees Fees

Zadra v Cortese 2016 BCSC 390 dealt with a passing of executor’s accounts before a registrar to determine the amount of executor/trustees fees for handling a complex estate for ten years but delegating most of the work to professionals.

The value of the estate increased from $800,000 to $4.8 million over this time due to the rise in the real estate market.

The registrar allowed fees of %3 of the gross estate, plus %3 of the estate’s income and a management fee of $12,000.

The executor had pre- taken fees of $70,000 but was not admonished for it as it was done in the belief that the executor was entitled to it.

The Court Stated:

41 Sections 88 and 89 of the Trustee Act, R.S.B.C. 1996, c. 464, provide as follows:

88 (1) A trustee under a deed, settlement or will, an executor or administrator, a guardian appointed by any court, a testamentary guardian, or any other trustee, however the trust is created, is entitled to, and it is lawful for the Supreme Court, or a registrar of that court if so directed by the court, to allow him or her a fair and reasonable allowance, not exceeding 5% on the gross aggregate value, including capital and income, of all the assets of the estate by way of remuneration for his or her care, pains and trouble and his or her time spent in and about the trusteeship, executorship, guardianship or administration of the estate and effects vested in him or her under any will or grant of administration, and in administering, disposing of and arranging and settling the same, and generally in arranging and settling the affairs of the estate as the court, or a registrar of the court if so directed by the court thinks proper.

(2) The court or a registrar of the court if so directed by the court, may make an order under subsection (1) from time to time, and the amount of remuneration must be allowed to an executor, trustee, guardian or administrator, in passing his or her accounts, in addition to any other allowances for expenses actually incurred to which the trustee, executor, guardian or administrator may by law be entitled.

(3) A person entitled to an allowance under subsection (1) may apply annually to the Supreme Court for a care and management fee and the court may allow a fee not exceeding 0.4% of the average market value of the assets.

89 The court may, on application to it for the purpose, settle or direct the registrar to settle the amount of the compensation, although the estate is not before the court in an action.

42 The administrator is entitled to remuneration for his work on the estate to a maximum of 5% of the gross aggregate value, including capital and income of all the assets of the estate at the date of passing, pursuant to s. 88(1) of the Trustee Act. The criteria to be considered in determining the amount of remuneration which should be awarded are set out in the much cited case of Toronto General Trusts Corp. v. Central Ontario Railway (1905), 6 O.W.R. 350 (Ont. H.C.) at para. 23wherein the Court states:

[23] From the American and Canadian precedents, based upon statutory provision for compensation to trustees, the following circumstances appear proper to be taken into consideration in fixing the amount of compensation:
(1) the magnitude of the trust;

(2) the care and responsibility springing therefrom;

(3) the time occupied in performing its duties;

(4) the skill and ability displayed;

(5) the success which has attended its administration.

43 It is not required that remuneration be fixed at a specific percentage of the gross value of the estate, it can be calculated as a lump sum provided it does not exceed 5%. In Turley, Re (1955), 16 W.W.R. 72 (B.C. S.C.) at para. 11 the Court stated:

[11] As to grounds 1 and 2 of this application, I think the principles to be applied are well settled. I adopt the statement of the principles as given in, I think, all the cases and found in Re Atkinson Estate [1952] OR 688, that the compensation allowed an executor is to be a fair and reasonable allowance for his care, pains and trouble and his time expended in or about the estate. Both responsibility and actual work done are matters for consideration and, while there should not be a rigid adherence to fixed percentages, they are to be used as a guide. I think that the factors I mentioned in my judgment on the previous motion are found here. It is not only the presence of continuing trusts that makes the realization and administration of estates difficult. It is submitted that the capital fee should be charged only on the amount realized, excluding those assets that go over in specie. While the fact that considerable portions of the estate are transferred in specie is a factor the registrar may consider in settling the percentage he allows, I think it would be quite inappropriate as a rule to exclude these in the computation of aggregate value. There appears to be evidence here of extensive work. It is the duty of the executor to administer the whole of the estate. His work in some things might not be compensated sufficiently by a percentage much in excess of the maximum allowed.

44 Maximum remuneration is not awarded as a matter of routine. Appropriate remuneration is a matter of what is fair and reasonable in all the circumstances. As stated by the B.C.C.A, in Kanee Estate, Re [1991 CarswellBC 654 (B.C. C.A.)] (19 September 1991), Vancouver Registry CA014168:

Maximum remuneration does not go as a matter of course and it is to be expected that there will be disputes over the quantum of remuneration. Section 90(1) does not prescribe an adversarial process. There are no plaintiffs, no defendants, no pleadings, no discoveries, no provisions for offers of settlement or payment into Court, and no other trappings of an adversarial nature, All interested parties are entitled to be heard but in the end the officers of the Court must decide what is fair and reasonable in all of the circumstances.

45 The amount of remuneration to be paid to the administrator is determined on a quantum merit basis which reflects the reasonable value of the services rendered, which is subject to a 5% maximum.

46 In this regard, evidence is required concerning the administrator’s experience in estate matters, the nature of the estate, the tasks undertaken, the time spent, unusual problems arising during the administration of the estate, the skill employed by the administrator, and the results achieved which were directly attributable to the administrator’s efforts. Documentary evidence and time records should be provided where they exist. The administrator provided this evidence over the course of days of testimony. In addition, extensive documentary evidence was provided by both the administrator and the beneficiaries. However, no time records were provided, as the administrator did not keep a record in this regard.

47 An inference may be drawn against an administrator for failure to provide time records in appropriate circumstances. See Lowe Estate, Re, 2002 BCSC 813 (B.C. S.C.) at para. 33.

48 A negative inference in this regard will be appropriate where criticisms in the administrator’s administration of the estate are found to be valid. In these circumstances, the administrator’s remuneration may be substantially reduced. See Lowe Estate, Re , supra, at paras. 27, 28, 41 and 42.

WESA: Forcing the Executor to Act & Rule 25-11

WESA: Forcing the Executor to Act & Rule 25-11

Forcing Executor to Act. Rule 25-11 of WESA permits ‘a person interested in the estate’ to use a Citation to compel the named executor to apply for probate or be deemed to have renounced.

This is an important tool in the arsenal of estate litigators when dealing with parties who for often unknown reasons refuse to proceed with the task of taking control of the deceased’s assets and affairs, getting the will probated, the debts paid, and the assets distributed to the beneficiaries.

Rule 25-1 (4) provides that an executor renounces executorship upon two circumstances:

  1. in the circumstances set out under paragraph 25 – 11 (5) where the executor is deem to have renounced executorship following a citation to apply for probate;
  2. when a Notice of Renunciation in Form 17 from the executor is filed in the relevant application or proceeding. There is now a prescribed notice of renunciation.

Since Rule 25-11 permits ” a person interested in the estate” to issue a Citation, so it is certainly arguable that the citation process will be available to not just named executors, beneficiaries, and creditors, but also to intestate heirs and potential wills variation claimants.

The Citation is issued in Form P32  of the WESA Rules.

The Citation  must clearly  identify the citor, the deceased, and the document which is to be probated as the will, as well as the citor1 s grounds for believing that the document exists.

The citation must be personally served and is not filed with the court registry  to commence the Citation process .

If the cited executor does apply for the grant, it is still open to the citor to apply under s. 158 of the WESA to remove or pass over the executor under appropriate circumstances.

The executor served with the Citation  must, within 14 days after being served  provide a copy of the grant of probate  by ordinary mail, or if no probate has yet been granted,  then serve the Citor as follows:

  1.  if they have submitted the probate documents to the registry, then provide by ordinary mail copies of the documents ;
  2. file an answer and form 33 stating that the cited person  will either apply for a grant of probate or refuses to apply for a grant of probate .

Under rule 25 – 11 (5)  a person who is cited to apply for a grant of probate  is deemed to have renounced executorship  to that document unless the grant of probate is obtained within six months after the date in which the citation was served, or within any longer. The court on application by the cited party may allow, or has filed an answer stating that   the executor refuses to apply for a grant of probate in respect of the testamentary document.

The standard 21 day notice of the application for probate will use up a significant portion of that six month period .

Any issue concerning the validity of the will or another impediment such as a notice of dispute, then the time period would be impossible to meet.

It is likely that in such scenarios that a court applications to extend the time period would be  necessary.

Signing a Trustee Release

Signing a Trustee Release

Anyone practicing law in wills and estates, or who has inherited monies, will be familiar with being required to sign a Trustee Release before the funds are disbursed to the beneficiaries.

In BC, it is simply the way business is conducted, and it saves a great deal of time and expense by not forcing the executor/trustee to pass accounts firstly before distributing the assets.

Thus I was somewhat surprised to read the following extract from Bronson v Hewitt 2010 BCSC 169:

The Trustee’s entitlement to demand a release does not arise for the first time in this action. The first reported case dates back to 1845. In Chadwick v. Heatley (1845) S.C. 2 Col. 137, 63 E.R. 671, the trustee sought to distribute trust funds to surviving beneficiaries. He offered a general release as a condition to the payment which the plaintiff refused to sign. The court concluded the trustee did not have the right to insist on having the release executed.

[655] In King v. Mullins (1852), 61 E.R. 469, the court held that although it was usual practice to give a release in order to discharge a trustee, a trustee paying in accordance with the letter of the trust has no right to require a release.

[656] In Brighter v. Brighter Estates, [1998] O.J. No. 3144 (Ct. J. (Gen. Div.)), the court was most critical of the executor requiring a release. The court said at para. 9:
… An executor’s duty is to carry out the instructions contained in the will … [T]he executor has no right to hold any portion of the distributable assets hostage in order to extort from a beneficiary an approval or release of the executor’s performance of duties as trustee, or the executor’s compensation or fee. It is quite proper for an executor (or trustee, to use the current expression) to accompany payment with a release which the beneficiary is requested to execute. But it is quite another matter for the trustee to require execution of the release before making payment; that is manifestly improper.

[657] In Rooney Estate v. Stewart Estate, [2007] O.J. No. 3944 (Sup. Ct. J.) the court noted at para. 39: “[t]he manner of sending the release first and the cheque later suggests the “beneficiary was held hostage for the release.”

[658] In spite of the judicial criticism, a review of British Columbia practice manuals and Continuing Legal Education (“CLE”) publications suggests that it is a common practice to seek a release prior to distribution: R.C. DiBella, Wills and Estate Planning Basics – How to Administer an Estate from Collecting the Assets to Paying Accounts, Materials prepared for CLE Seminar, Vancouver, B.C., October 2006; Gabrielle Komorowska, Guide to Wills and Estates, British Columbia ed. (Gibsons: Evin Ross Publications 1996); British Columbia Probate and Estate Administration Practice Manual, vol. 2, 2d ed. (Vancouver: CLE BC, 2007).

[659] The alternative to obtaining a release is for the trustee to pass his accounts. The passing of accounts will release a trustee from future obligations. For a trustee to request a release of future claims is not in itself objectionable. In this case, however, the proffered document seeks not only a release of future claims but also that the beneficiaries indemnify and hold harmless Howard from any claims arising subsequent to September 30, 2002. A request for an indemnity and hold harmless agreement goes well beyond the type of release referenced in the B.C. practice manuals. In addition, the Distribution Letter suggests that the beneficiaries must sign the Release before any cheque will be forthcoming.

[660] While a request for a release and indemnity in that form may be objectionable, it does not in the first instance create any loss or damage. If all of the beneficiaries had been prepared to sign the Release, matters would have been resolved. They, of course, were not.

[661] What happened subsequently is a matter of greater concern. That signing the Release was a condition of being paid became clear when only those who signed the Release were paid. Under the terms of the trust, distributions were to be made equally. That did not happen. Only those who signed the Release got paid.

[662] The submission that the trustee was entitled to pay certain beneficiaries and accumulate for others is, with respect, untenable. It is contrary to the terms of the BNT Trust Agreement. Further, it is clear that the trustee was not in this case exercising a good faith discretion in accumulating for some beneficiaries and paying others. The only reason the plaintiff beneficiaries were not paid was because they were not prepared to sign the Release, a document that the trustee was not entitled to demand.

[663] By paying certain beneficiaries and not others, Howard breached the terms of the BNT. As soon as Howard paid certain beneficiaries, he was legally obliged to pay the others, regardless of whether or not they were prepared to sign the Release. Although he may have been entitled to hold all of the funds pending a passing of accounts, what he could not do, given the terms of this trust, was to pay some beneficiaries and not others.

[664] It is a principle of equity that equity will not suffer a wrong to be done without a remedy: John McGhee, Snell’s Equity, 31st ed. (London: Sweet & Maxwell, 2005).

Liability of Trustees

Liability of Trustees

Daum v Clapci  2016 BCCA 176 recently discussed the liability of a trustee for failing to properly insure a hotel that burned  stating inter alia.

The test for liability is essentially one of honesty and reasonable man prudence in administering the estate affairs as if they were his or her own.


23      The trial judge described Mr. Clapci’s decision to eliminate replacement insurance coverage for the Hotel as “recklessness”, but he found that this conduct was not linked to Mr. Clapci’s duties as a trustee and therefore did not constitute a breach of trust. In reaching that conclusion, the trial judge relied on Waters’ Law of Trust in Canada, 4th ed., at page 932 and following.

24      Professor Waters at pages 931 and 932 states that “[t]he duty of loyalty requires the avoidance of situations where that duty conflicts with the self-interest of the fiduciary” but “should not encompass activities which are so remote from the task undertaken that they could not in any reasonable assessment be said to be forbidden”. 

Equity has come to take the view that the solution is provided by an examination of the scope of the agency or task undertaken. If the person who owes fiduciary duties is acting outside the scope of the task he has undertaken – that is, in a manner which has nothing to do with his task – then he will not be required to hand over to the principal any profit which he has made or to desist from any intended activity which would render him profit.

Even by narrowing the principle in this way, however, there are bound to be difficult questions of fact as to whether the particular fiduciary was indeed in the circumstances acting within the scope of his activity when he made a profit for himself, or was positioning himself to make such an intended profit. But the difficult questions of fact which have ceaselessly troubled the courts cannot be avoided; they are inseparable from the application of the principle of conflict of interest and duty.

Professor Waters notes at page 906:

[A] trustee must act honestly and with that level of skill and prudence which would be expected of the reasonable man of business administering his own affairs.