Committeeship and the Patients Property Act

Committeeship and the Patients Property Act

Re Haston 2016 BCSC 1962 is a good review of the law relating  to the appointment of a committee under the Patients Property Act, as well as the criteria for choosing the best party to be the committee. Once appointed the committeeship voids any Powers of Attorney or Representation agreements that existed prior to the court order for committeeship.

21      The applicable statutory provisions for the judicial determination of whether a person is incapable of managing herself or her affairs are found in s. 3 of the Patient Property Act

Hearing of application

3(1) If, on

(a) hearing an application, and

(b) reading the affidavits of 2 medical practitioners setting out their opinion that the person who is the subject of the application is, because of

(i) mental infirmity arising from disease, age or otherwise, or

(ii) disorder or disability of mind arising from the use of drugs,

incapable of managing his or her affairs or incapable of managing himself or herself, or incapable of managing himself or herself or his or her affairs,

incapable of managing his or her affairs or incapable of managing himself or herself, or incapable of managing himself or herself or his or her affairs, it must, by order, declare the person

(2) The court may, on hearing an application under this section and reading the affidavits described in subsection (1), direct an issue to be tried, and in that event the following provisions apply:

(a) the question in issue is whether the person who is the subject of the application is, because of

(i) mental infirmity arising from disease, age or otherwise, or

(ii) disorder or disability of mind arising from the use of drugs,

(b) this Act applies to the issue and the trial of it;

(c) the Supreme Court Civil Rules apply;

(d) the court must

(i) dismiss the application, or

(ii) by order, declare that the person who is the subject of the application

(A) is incapable of managing his or her affairs,

(B) is incapable of managing himself or herself, or

(C) is incapable of managing himself or herself or his or her affairs.

the court is satisfied that the person is, because of

(c) mental infirmity arising from disease, age or otherwise, or

(d) disorder or disability of mind arising from the use of drugs,

(e) incapable of managing his or her affairs,

(f) incapable of managing himself or herself, or

(g) incapable of managing himself or herself or his or her affairs.

Law

24      Section 6 of the PPA provides that “on application . . . the court may appoint any person to be the committee of a patient.” The powers of a committee are set out in ss. 15 and 17.

25      In circumstances where a patient has been declared incapable of managing herself or her affairs, these include “all the rights, privileges and powers with regard to the estate of the patient as the patient would have if of full age and of sound and disposing mind”, and as well “the custody of the person of the patient”: PPA s. 15(1)(a) and (b)(ii).

26      A committee is also vested with all “the rights, powers and privileges that would be exercisable by the patient as a trustee, as the guardian of a person, as the holder of a power of appointment and as the personal representative of a person, if the person were of full age and of sound and disposing mind”: PPA s. 17.

27      Section 16 allows the court to “attach conditions or restrictions” on the powers of a committee in the same order by which the committee is appointed. Committeeship may be divided between multiple joint or co-committees.

28      The PPA does not prescribe any criteria for the selection of an appropriate committee. Section 18(1) provides as follows:

18(1) A committee must exercise the committee’s powers for the benefit of the patient and the patient’s family, having regard to the nature and value of the property of the patient and the circumstances and needs of the patient and the patient’s family.

29      Counsel provided two main authorities that discuss the relevant factors the court should consider when determining who is best suited to act as a committee under the PPA: Baker-MacGrotty v. Baker, 2016 BCSC 699[Baker-MacGrotty] and Bowman (Re), 2009 BCSC 523 [Bowman].

30      In Bowman, at paras. 32-34, Dardi J. held that “the test for determining who is an appropriate committee . . . is governed by the patient’s best interests”; the choice between two proposed committees involves an inquiry into who will best serve those interests: see also Re Pineo [1985] B.C.J. No. 1171 (S.C.) at para. 6.

31      In Baker-MacGrotty at para. 37, Bernard J. quoted Masuhara J.’s helpful summary from Stewart (Re), 2014 BCSC 2321, of the applicable law on this question. Masuhara J. listed the following considerations:

(a) whether the appointment reflects the patient’s wishes, obviously when he or she was capable of forming such a wish;

(b) whether immediate family members are in agreement with the appointment;

(c) whether there is any conflict between family members or between the family and the patient, and whether the proposed Committee would be likely to consult with immediate family members about the appropriate care of the patient;

(d) the level of previous involvement of the proposed Committee with the patient, usually family members are preferred;

(e) the level of understanding of the proposed Committee with the patient’s current situation, and will that person be able to cope with future changes of the patient;

(f) whether the proposed Committee will provide love and support to the patient;

(g) whether the proposed Committee is the best person to deal with the financial affairs and ensure the income and estate are used for the patient’s benefit;

(h) whether a proposed Committee has breached a fiduciary duty owed to the patient, or engaged in activity which diminishes confidence in that person’s abilities to properly handle the patient’s affairs;

(i) who is best to advocate for the patient’s medical needs;

(j) whether the proposed Committee has an appropriate plan of care and management for the patient and his or her affairs and is best able to carry it out; and

(k) whether a division of responsibilities such as between the patient’s estate and the patient’s person to different persons would serve the best interests of the patient, or would such a division be less than optimal for the patient.

32      I would add to this non-exhaustive list the following considerations: whether the proposed Committee’s resides near the patient; whether the proposed Committee is able to provide transportation for the patient, if necessary; whether outside demands on the proposed Committee’s time and availability will detract from his or her ability to perform his or her obligations; and whether the proposed Committee is able and willing to facilitate any recreation or religious practice in which the patient wishes to participate.

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.

Interim Distribution Ordered

Interim Distribution Ordered

An interim distribution of $250,000  of his maximum estate entitlement of $460,000 was ordered to a 76 year old former spouse of the deceased who needed funds in Davis v Burns Estate 2016 BCSC 1982.

The application was made  under section 155 of the Wills, Estates Succession Act, S.B.C. 2009, c.13, (the “Act“) and Rules 8 — 1, 14 — 1, and 22-1 of the Supreme Court Civil Rules for the payment of an interim distribution.

The remaining litigants were refused the same advance primarily as they had not applied and were left to continue their litigation over the remaining $2,250,000. in the estate. They had opposed the interim advance unless the court awarded them the same but the court stated since they had not applied, the court could not review their application in light of the required law as set out in the Hecht case below.

Discussion of the Legal Principle to be Applied

31      In Hecht v. Hecht Estate (1991), 62 B.C.L.R. (2d) 145 (C.A.) at paras. 42- 46 the Court of Appeal set out a number of the factors the court was to consider when deciding whether to exercise its discretion to grant leave to the executors to make an interim distribution when Wills Variation Act proceedings have been commenced. The Wills Variation Act, R.S.B.C. 1996, c. 490, was repealed and replaced by the Act under which proceedings have been commenced by Leslie. Those factors included:
a. the amount of the benefits sought to be distributed as compared to the value of the estate;
b. the claim of the beneficiaries on the testator;
c. the need of beneficiaries for money; and
d. the consent of the residuary beneficiary to the proposed transfer.
See also Henney v. Sander, 2014 BCSC 889 at para. 38.

Fraudulent Misrepresentation

Fraudulent Misrepresentation

Jasmur Holdings Ltd v Taynton Developments Inc. 2016 BCSC 1902 reviewed inter alia the tort of fraudulent misrepresentation.

116.       The tort of fraudulent misrepresentation has four elements. They were recently summarized by the Supreme Court of Canada in Combined Air Mechanical Services Inc. v. Flesch 2014 SCC 8 (S.C.C.), at paragraph 21:

[21] From this jurisprudential history, I summarize the following four elements of the tort of civil fraud:

(1) a false representation made by the defendant;

(2) some level of knowledge of the falsehood of the representation on the part of the defendant (whether through knowledge or recklessness);

(3) the false representation caused the plaintiff to act;

and (4) the plaintiff’s actions resulted in a loss.

117      With respect to negligent misrepresentation, the elements were described in Queen v. Cognos Inc. [1993] 1 S.C.R. 87 (S.C.C.) at 110:

. . . (1) there must be a duty of care based on a “special relationship” between the representor and the representee; (2) the representation in question must be untrue, inaccurate, or misleading; (3) the representor must have acted negligently in making said misrepresentation; (4) the representee must have relied, in a reasonable manner, on said negligent misrepresentation; and (5) the reliance must have been detrimental to the representee in the sense that damages resulted. . . .

118      As Kirkpatrick J. said in PD Management Ltd. v. Chemposite Inc. 2006 BCCA 489 (B.C. C.A.), at paragraph 14:

[14] It is settled law that an alleged misrepresentation must pertain to a matter of fact. In MacMillan v. Kaiser Equipment Ltd., 2003 BCSC 672, aff’d 2004 BCCA 470, this Court dismissed the claims for damages for misrepresentation because “it is clear that each of the alleged representations relate to a future occurrence, and not to an existing state of events. A future offer . . . is not an actionable representation” (para. 85). 

137      The plaintiffs rely on D. Debenham, The Law of Fraud and the Forensic Investigator, 3rd ed. (Toronto: Carswell, 2012) at page 14 with respect to their claim of constructive fraud:

Constructive fraud does not require a proof of design to mislead or deceive another, but of some failure to perform an obligation in good faith, or in accordance with the intention of the parties, often out of self-interest. It is not simply bad judgment or negligence, but it is more – a failure to properly respect the rights of one who is vulnerable to the power of another. That vulnerability may be as a result of a preceding contractual obligation which has left one person at the mercy of another, or it may be as a result of the facts and circumstances of the particular case. Constructive fraud does not imply fault, in the sense of intentional misconduct, like actual fraud does. The standard for constructive fraud is objective, while actual fraud (also known as “fraud at law”) requires a subjective dishonest intention. Thus, in cases like Boardman v. Fhips and Regal (Hastings) Ltd. v. Gulliver, the courts have found constructive fraud where the defendants thought they were acting entirely properly, because the court found that their conduct did not comport the legal standard required of someone who had power over the affairs of another.

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.

Adding Defendants

Adding Defendants

Stewart v. Stewart  2016 BCSC 1576 was a contested application for adding defendants to a court action commenced by one of four children to wind up a trust.

The application to add the remaining three children as defendants was opposed on the basis that the trustee could and would represent the interests of the other three children.

The court allowed the three defendants to be added as parties as there was a different legal position being put forward between the -plaintiff as a beneficiary and the applicants to be added as defendants as beneficiaries.

A: RULE 6-2(7)(b)

[34]         This subrule provides two alternate tests:

  • whether the person ought to have been joined as a party, or
  • whether that person’s participation in the proceeding is necessary to ensure that all matters in the proceeding may be effectually adjudicated on.

[35]         The Applicants, relying on Kitimat (District) v. Alcan Inc., 2006 BCCA 562 at para. 28, submit that if either of the circumstances referred to in paragraph 34 above arise, then the person should be added as a party.

[36]         They argue it is necessary to join the Applicants as defendants since their direct interests might be affected by the granting of the relief sought in the NOCC.

[37]         Kitimat was considered and applied in Delta Sunshine Taxi (1972) Ltd. v. Vancouver (City), 2014 BCSC 2100 at para 14:

[14]      “Ought” is a broader concept than “necessary” and includes situations in which joining the person may be more than mere convenience but less than necessity (Kitimat at para. 29). Necessary parties are those whose direct interests might be affected by the relief sought (Canadian Labour Congress v. Bhindi (1985), 1985 CanLII 384 (BC CA), 61 B.C.L.R. 85 at 94 (C.A.) (Canadian Labour Congress), Kitimat at paras. 30-32). In Kitimat, the petitioners sought to quash a decision of the province that authorized Alcan Inc. (“Alcan”) to sell hydro power that it produced for use outside of Kitimat’s aluminum industry, without adding Alcan as a party. The Court found that Alcan ought to have been joined and that Alcan was a necessary party because a binding order would limit the instruments held by Alcan, without its participation. In other words, the effect of the petition could be to limit the ability of Alcan to sell the hydro power it produced, so affecting the value of the power and the financial interests of Alcan

[38]         Their arguments include:

  • as in Kitimat, the relief sought by the plaintiff in these proceedings will affect the Applicants’ rights and interests under the Trusts. If the plaintiff is successful, there will be a direct financial impact on the Applicants in that among other relief, the plaintiff seeks orders that QPPC and its subsidiaries, ABC and its subsidiaries, the Stewart Trust, and the Martin Trusts be liquidated, dissolved or wound up and the Trustees of the Stewart Trust and Martin Trusts distribute one-quarter of the assets held by the Trusts to each of the plaintiff, and the Applicants, adjusted for any unequal distributions;
  • accordingly, if the plaintiff’s claims were successful, the operations of QPPC, ABC, and their subsidiaries would be terminated prematurely. The Stewart Trust and the Martin Trusts would also be terminated, the Trust assets distributed, and the Applicants’ rights and interests as beneficiaries under those Trusts would be eliminated;
  • the Stewart Trust and the Martin Trusts are a major source of income for the Applicants. The plaintiff has stated that the Applicants and the plaintiff have received over $34 million in equal shares from the Stewart Trust alone since its settlement. The relief sought by the plaintiff in these proceedings would terminate this ongoing income source;
  • it is no answer for the plaintiff  to say that the interests of the Applicants are not directly affected because they would be entitled to a distribution of an approximately equal share of the trust property should the relief be granted. The plaintiff has pled that the purpose of the Trusts was to allow the Deceased’s assets to grow in a consolidated and diversified manner for the benefit of the Deceased’s children and their issue.
  • this is not one of those situations where the beneficiaries’ input is necessary or helpful;
  • to the extent that any of the interests of the beneficiaries of the family trusts are affected by the claims brought in the within proceeding, their interests ought to and can be protected by the defendant trustees of the family trusts. The Applicants have not asserted any argument or defence that would be available to them as trust beneficiaries that is not available to be advanced, or has not been advanced, by the defendant Trustees of the family trusts.

[41]         I have concluded that the application should be granted. While I accept that the Applicants do not currently have a position adverse in interest to the trustees, that is not, in my view, the proper test to be applied.

S 151 WESA – Court Allows Applicant to Sue as Executor

S 151 WESA - Court Allows Applicant to Sue as Executor

Werner v. McLean 2016 BCSC 1510 granted relief under S 151 WESA that the applicant be authorized to bring court action in the name of and sue on behalf of the personal representative of the estate as executor.

The court approval was in order to litigate whether an asset was or was not an estate asset. The court found that the applicant had satisfied the required criteria under S 151 WESA.

An application in the alternative that the executor be removed and the applicant substituted as executor  was dismissed on the basis that the executor had not acted improperly.

The court stated:

[9]             On an application for removal of a trustee, the court’s focus is on the welfare of the beneficiaries of the trust estate: Letterstedt v. Broers (1884), 9 App. Cas. 371 (P.C.); Conroy v. Stokes, [1952] B.C.J. No. 111 (C.A.). Not every act of misconduct should result in removal. The question is whether the acts or omissions endanger the trust property or show a want of honesty or proper capacity to execute the duties or reasonable fidelity: Letterstedt, at 386.

Section 151 of the Wills, Estates and Succession Act provides, in relevant part, as follows:
(1)  Despite section 136 [effect of representation grant], a beneficiary or an intestate successor may, with leave of the court, commence proceedings in the name and on behalf of the personal representative of the deceased person
(a)  to recover property or to enforce a right, duty or obligation owed to the deceased person that could be recovered or enforced by the personal representative, or
(b)  to obtain damages for breach of a right, duty or obligation owed to the deceased person.
…
(3)  The court may grant leave under this section if
(a)  the court determines the beneficiary or intestate successor seeking leave
(i)   has made reasonable efforts to cause the personal representative to commence or defend the proceeding,
(ii)   has given notice of the application for leave to
(A)  the personal representative,
(B)  any other beneficiaries or intestate successors, and
(C)  any additional person the court directs that notice is to be given, and
(iii)   is acting in good faith, and
(b)  it appears to the court that it is necessary or expedient for the protection of the estate or the interests of a beneficiary or an intestate successor for the proceeding to be brought or defended.
(4)  On application by a beneficiary, an intestate successor or a personal representative, the court may authorize a person to control the conduct of a proceeding under this section or may give other directions for the conduct of the proceeding.

Deceased Assets Vest In Executor

Deceased Assets Vest In Executor

A deceased person’s assets vest in his or her executor or administrator after death.

If an executor is removed or renounces the new executor/trustee then holds the assets in trust as they now vest with the new executor/trustee.

Browne v Browne Estate 2015 BCSC 28, the court  removed an executor and stated:

[22]         At common law the executor derives title from the will: Sustrik Estate v. Floyd, 2005 ABQB 880.

Section 102 of the Wills, Estates and Succession Act, S.B.C. 2009, c. 13 provides:

(2)        The estate of a deceased person vests in the person’s personal representative when the personal representative assumes or is appointed to that office.

What is a Discretionary Trust?

What is a Discretionary Trust?

The BC Court of Appeal in Putzki v Saunders 2016 BCCA 344 examined the nature of a family property trust and discussed what is a discretionary trust.

A discretionary trust is commonly used in estate planning often  when dealing with infants, disabled people on a government pension, spendthrifts and mentally challenged people of all sorts. The simple idea is that someone else who is neutral and competent manages the assets/ monies held in the trust for the benefit of the beneficiary, typically by paying the interest and some capital from time to time when necessary.

Underhill and Hayton: Law of Trusts and Trustees, 18th ed. (London: LexisNexis, 2010) at 98, describe the nature of a discretionary trust as follows:

Where a beneficiary has no such absolute current right to direct the trustees to pay him an ascertainable part of the net income or capital he has ‘no interest in possession’, only being interested under a discretionary trust. Typically, this is the case where a beneficiary will receive income only if the trustees positively decide to carry out their duty to distribute income by favouring him rather than another member of the class of potential beneficiaries. There is also the atypical case where a beneficiary must receive the income unless the trustees exercise distributive (or dispositive) powers to divert the income elsewhere … or to withhold it …: the discretion-conferring distributive powers prevent an interest in possession arising (eg where B is a life tenant subject to dispositive powers).
66      A discretionary trust is distinct from a fixed trust. The authors of Underhill and Hayton at 98, describe a fixed trust as follows:
Where a beneficiary has a current fixed entitlement to an ascertainable part of the net income or net capital, if any, of the trust fund after deduction of sums paid by the trustees in the exercise of their administrative powers of management, the beneficiary has a fixed interest which ranks as ‘an interest in possession’ under the trust.
67      Unlike a fixed trust, the beneficiaries of a fully discretionary trust and their entitlements (distinct from the potential beneficiaries and their potential entitlements) cannot be ascertained at the time of settlement. A discretionary trust may also come in a variety of forms. Under an “exhaustive” discretionary trust, the trustee must distribute the whole of the income or capital, or both, but retains the power to choose who among the potential beneficiaries should receive distributions, and in what amount. Under a “non-exhaustive” discretionary trust, the trustee has the added power to choose whether or not to make any distribution at all.

Removal of Executor

Removal of Executor
 Re Kolic Estate 2016 BCSC 1312 contains an excellent summary on the criteria for the removal of executor.
 
In Kolic the court ordered the removal of executor for basically choosing sides in the litigation concerning the very will that she was to remain impartial over pending the litigation.
22      The authority to remove Mary and substitute another individual as executor to Violet’s Will is found under s. 31 of the Trustee Act, R.S.B.C. 1996, c. 464, and the inherent jurisdiction of the court. Given that a Master does have any inherent jurisdiction to exercise, the basis for Joseph’s remedy must be s. 31. That provision reads as follows:
31 If it is expedient to appoint a new trustee and it is found inexpedient, difficult or impracticable to do so without the assistance of the court, it is lawful for the court to make an order appointing a new trustee or trustees, whether there is an existing trustee or not at the time of making the order, and either in substitution for or in addition to any existing trustees.
23      In Miles v. Vince, 2014 BCCA 289 (B.C. C.A.), the court adopted the following guidelines when considering an executor’s removal and substitution:
84 What circumstances justify the removal of a trustee? In Letterstedt v. Broers (1884), 9 App. Cas. 371 (J.C.P.C.), the court established guidelines justifying the removal of a trustee (at 385-389):
1. If the Court is satisfied that the continuance of the trustee would prevent the trusts being properly executed, the trustee might be removed. It must always be borne in mind that trustees exist for the benefit of those to whom the creator of the trust has given the trust estate.
2. The acts or omissions must be such as to endanger the trust property or to show a want of honesty, or a want of proper capacity to execute the duties, or a want of reasonable fidelity.
3. In exercising the delicate jurisdiction of removing trustees, the Court’s main guide must be the welfare of the beneficiaries. It is not possible to lay down any more definite rule in a matter that is so “essentially dependent on details often of great nicety.” The Court must proceed to look carefully into the circumstances of the case.
4. Where a trustee is asked to resign, and if it appears clear that the continuance of the trustee would be detrimental to the execution of the trusts, even if for no other reason than that human infirmity would prevent those beneficially interested, or those who act for them, from working in harmony with the trustee, and if there is no reason to the contrary from the intentions of the framer of the trust to give this trustee a benefit or otherwise, the trustee is always advised by his own counsel to resign.
5. The lack of jurisprudence in respect of the removal of a trustee reflects that a trustee when asked to do so, will resign.
6. If, without any reasonable ground, the trustee refuses to do so the court might think it proper to remove him.
7. Friction or hostility between trustees and the beneficiary is not of itself a reason for the removal of the trustees. But where the hostility is grounded on the mode in which the trust has been administered, where it has been caused wholly or partially by substantial overcharges against the trust estate, it is not to be disregarded.
24      The first question to be answered is whether Mary is properly fulfilling her role as executor. In my view, she is not.
25      The primary duty of an executor is to preserve the estate assets, pay the debts and distribute the balance to the beneficiaries entitled under the Will, or in accordance with any order made varying the terms of the Will. The executor should not pick sides between beneficiaries, and should be indifferent as to how the estate is to be divided: Quirico v. Pepper Estate, 1999 CarswellBC 2177 (B.C. S.C.).