Category: Estate Litigation

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Estate Litigation Estate Planning

Can a Power Of Attorney Dispose of Property That is a Testamentary Gift?

photo of keys in door lock representing the sale of property by a power of attorney

Generally, a Power of Attorney confers significant authority and power to the appointed individual. In the recent case of McKenzie v Morgan, the Ontario Superior Court of Justice (the “Court”) considered whether the Applicant, who was the power of attorney for property and personal care for “RM”, could sell one of RM’s properties. The property in question, referred to as the “Springdale Property,” was subject to a life leasehold interest in favour of the Respondent set out in RM’s Last Will and Testament.

Power of attorney for property seeks to sell father’s property

RM, at the time of the decision, was 85 years old and was diagnosed with dementia. The Applicant, “DM”, is one of RM’s five children. The Respondent (“WM”) is RM’s sister-in-law (and the Applicant’s aunt) and was romantically involved with RM after their respective partners passed away. While the Applicant contests that they are common law spouses, there was evidence that RM and the Respondent were a couple and represented themselves as a couple.

In regard to the property in question, the Court noted that the sale of a property would normally be within the Applicant’s power as RM’s attorney for property under the Substitute Decisions Act.

Property subject to a life leasehold interest

RM executed a Last Will and Testament a few years before the litigation, which contained the following provisions regarding the Springdale Property:

“I GIVE all my property wheresoever situate, including any property over which I may have a general Power of Appointment, to my trustees upon the following trusts, namely,

…

(b) to permit [WM] to continue to reside at my home at … Barrie, Ontario, for the rest of her life, or until she chooses to move out, pursuant to the terms of a Residential Rental Agreement dated April 2, 2018. Upon [WM] moving out of the property, or dying, the house will form part of the reside (sic) of my estate and be dealt with as part thereof.”

The Court noted that this effectively gave WM a life leasehold interest in the Springdale Property.

Respondent sought to reside at the property; refuses to cooperate with sale

The Applicant listed the Springdale Property for sale without notice to or consultation with the Respondent. However, the Respondent refused to cooperate with the sale of the home, which resulted in the Applicant commencing this Application. The Applicant ultimately sought an order permitting her to sell the Springdale Property and evict the Respondent.

Sections 36 and 35.1 of the Substitute Decisions Act prohibit a power of attorney, or guardian, for property from disposing of property that is the subject of a specific testamentary gift unless:

  1. “it is necessary to comply with the guardian’s duties, or
  2. it is a gift of property to the person entitled to receive it under the Will, and the gift is permitted under section 37 of that same legislation.”

In determining whether the Applicant could dispose of property that is the subject of a testamentary gift – which the Court found that the Springdale Property was – the Court first looked at the duties of powers of attorneys generally, and the anti-ademption provisions of the Substitute Decisions Act.

Duties of power of attorney for property

The primary duty of a power of attorney is to act as a fiduciary, as detailed in section 32 of the Substitute Decisions Act. This duty encompasses acting diligently and honestly, with integrity and good faith, for the incapable person’s benefit. This also includes managing property in a manner that is consistent with other decisions concerning the incapable person’s personal care, as well as encouraging the incapable person to participate in decisions about property, as they are able.

If a power of attorney is not receiving compensation for managing the incapable person’s property, then they shall still exercise the degree of care, diligence, and skill that a person of ordinary prudence would exercise in their own affairs. On the other hand, if the power of attorney is receiving compensation, then they shall exercise the care, diligence, and skill that a person in the business of managing others’ property would exercise.

Anti-ademption provisions of the Substitute Decisions Act

Under ordinary circumstances, when a Last Will and Testament contains a bequest that is not among the testator’s assets when the testator dies, then the gift has “adeemed” which means that it has failed and it cannot be bequeathed. Section 36 of the Substitute Decisions Act, however, outlines various consequences that may arise if a power of attorney disposes of property that is subject to a specific testamentary gift. Specifically, the provision states that:

“anyone who would have acquired a right to the property on the death of the incapable person is entitled to receive from the residue of the estate the equivalent of a corresponding right in the proceeds of the disposition of the property, without interest.”

Court finds sale of property is not necessary

The Applicant claimed that she needed to sell the Springdale Property in order to support RM, describing details of RM’s assets, debts, expenses, and income. She highlighted that he currently had a shortfall of about $150,000 per year.

However, the Court did not accept the Applicant’s evidence in this regard, having “no confidence in [the Applicant’s] financial assessment and forecasting.” One concern cited by the Court was the Applicant’s attempt to sell the Springdale Property without consulting with other family members, despite knowing that it was the subject of a specific testamentary gift, and incurring legal fees that she expected RM to pay, while knowing that he cannot do so without selling an asset. The Court also found that information related to RM’s expenses was estimated, appeared “inflated or exaggerated,” and was “not supported by the documentation.”

Ultimately, the Court questioned and doubted the Applicant’s credibility and her reliability, while also noting the Applicant’s clear dislike for the Respondent. It was due to these evidentiary and credibility issues that the Court determined that it could not conclude that the sale of the Springdale Property was necessary for the Applicant to fulfill her duties as power of attorney. Her claim was dismissed without prejudice and with the right to renew it with further and better evidence.

Contact the Lawyers at Bader Law in Mississauga & Oakville for Trusted Advice on Will and Estate Matters

The knowledgeable wills and estates lawyers at Bader Law help individuals, families and business owners plan for the future by providing comprehensive estate planning solutions in Mississauga, Oakville, and throughout the Greater Toronto Area. From drafting a will, preparing a power of attorney, or selling assets, our lawyers will work closely with you to ensure your needs are met. We also represent estate trustees and beneficiaries in a variety of probate matters. To discuss your estate concerns with a member of our team, contact us online or by phone at (289) 652-9092 to learn how we can help you.

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Estate Litigation Estate Planning

Are Foster Children Entitled to a Deceased Parent’s Estate?

Intestacy can be a complicated and emotional affair, made only more so if the testator dies without a will. In these situations, the rights of foster children and their entitlement to claim a share of a deceased person’s estate can raise questions and concerns. This blog post will delve into the intricacies of inheritance laws, exploring the rights foster children may or may not possess when it comes to a deceased individual’s estate by examining a recent case decided on this topic in Ontario.

Intestacy in Ontario

The Succession Law Reform Act, commonly referred to as the “SLRA”, is the central piece of legislation governing the distribution of estates in Ontario. Primarily, the Succession Law Reform Act outlines rules for the distribution of assets when an individual passes away without a valid will. It establishes a default order of succession, prioritizing spouses, children, siblings, and other close relatives in the absence of specific testamentary instructions. Specifically, the Succession Law Reform Act states:

(4) Where a person dies intestate in respect of property and there is no surviving spouse, issue or parent, the property shall be distributed among the surviving brothers and sisters of the intestate equally, and if any brother or sister predeceases the intestate, the share of the deceased brother or sister shall be distributed among his or her children equally.

This provision was applicable in Estate of Sydney Monteith v. Monteith et al, where the dispute revolved around whether a foster child of the deceased’s parents was considered a sister to the deceased.

Foster Child Claim’s Entitlement to Share of Estate

In the case of Estate of Sydney Monteith v. Monteith et al, an adopted individual died without a will and had no spouse or surviving children. The adoptive parents of the deceased had also fostered one of the respondents, along with 136 other children. This respondent was never formally adopted, but maintained a close relationship with one of her foster parents. This relationship was close enough to the point where the parent often referred to this respondent as his “daughter,” and he named her his Attorney for Property, a co-executor, and beneficiary of his will.

Since the deceased did not have a will, his estate was distributed by the Succession Law Reform Act such that his siblings or their children received equal portions of the estate. The respondent child referred to above claimed that since her adoptive parent treated her as his daughter, she must be considered the deceased’s sister per the Succession Law Reform Act.

The applicant and other respondents disagreed and argued that she had no legal entitlement to share in the estate as a surviving sister.

Who is Considered a “Child” in Ontario’s Intestacy Law?

The Judge in the above case examined the definition of child in various relevant legislation and in particular, the Children’s Law Reform Act (also referred to as the “CLRA”), which states:

4 (1) A person is the child of his or her parents.

(2) A parent of a child is,

(a)  a person who is a parent of the child under sections 6 to 13, except in the case of an adopted child;

(b)  in the case of an adopted child, a parent of the child as provided for under section 217 or 218 of the Child, Youth and Family Services Act, 2017.

(3) The relationship of parent and child set out in subsections (1) and (2) shall be followed in determining the kindred relationships that flow from it.

(4) For greater certainty, this section applies for all purposes of the law of Ontario. 

In this case, the Judge wrote that, per this definition, it is immediately apparent that the respondent was not a child of her foster parent; he was not her birth parent, and he did not officially adopt her (unlike the other respondents). The Judge also noted that the Children’s Law Reform Act includes a definition of “adopted child,” which requires an adoptive order.

Court Determines Respondent is Not a Child of Her Foster Parent

The Judge conceded that while the law considers children to include individuals “whom a parent has demonstrated a settled intention to treat as a child of his or her family,” such as in the case of the Family Law Act, the legislation includes exceptions for foster children. The Judge agreed that the purpose of this exception was to not burden or disincentivize adoptive parents with the threat of a multitude of estate claims.

Ultimately, the Judge found that the respondent was not a child of her foster parent and, thus, not a sister of the deceased. This case provides clarity regarding the rights of foster children and highlights the fact that if foster children are not adopted, they will generally not be considered to be children of their foster parents. This case also serves as a reminder about the importance of having a will and illustrates the potential issues that can arise when someone dies intestate.

Contact the Estate Planning Lawyers at Bader Law for Assistance Drafting a Will

At Bader Law, our talented estate planning lawyers have considerable experience providing insight and legal guidance on the estate planning process. We work closely with individuals to prepare their estate documents, and we also help estate trustees and beneficiaries throughout the entire probate process. We represent individuals, families and business owners throughout Oakville, Mississauga and throughout the Greater Toronto Area prepare comprehensive estate plans to ensure their needs are met. We advise clients on best practices in both simple and complex estate matters to ensure they have a plan in place to protect their interests and minimize their estate tax obligations. Contact us online or by phone at (289) 652-9092 to learn how we can assist you.

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Estate Litigation Estate Planning Real Estate

Joint Tenancy and Avoiding Probate Fees

There are a variety of legal approaches that parties can use to avoid paying fees associated with property transfers, typically as a result of the death of a loved one. One such approach is using joint tenancy as an estate planning mechanism to avoid the payment of probate fees. However, this method does not come without its own risks and considerations, as demonstrated by a recent decision from the Ontario Superior Court of Justice.

Joint Tenancy or Tenants in Common?

An important concept discussed in the case of Jackson v. Rosenberg is that of joint tenancy and its relation to tenancy in common, which are two distinct forms of property ownership.

In a joint tenancy, co-owners share an undivided interest in the property, and upon the death of one owner, their share automatically passes to the surviving joint tenant(s). This process is known as the right of survivorship, ensuring a seamless transfer of ownership without the need for probate.

On the other hand, a tenancy in common involves individual ownership of specific, separate shares within the property. Each tenant in common is free to transfer their share independently, without the constraint of the right of survivorship. This structure allows for greater flexibility in estate planning, as tenants in common can distribute their ownership as they see fit among heirs or third parties.

Parties Become Joint Tenants

In Jackson v. Rosenberg, two individuals were registered as joint tenants to avoid paying the Estate Administration Tax. Still, they subsequently got into a dispute over the ownership of the property. Mr. Jackson was Ms. Rosenberg’s uncle’s longtime partner. When the uncle passed away, Mr. Jackson was named as the sole beneficiary of his estate. Mr. Jackson purchased the property in question (the “Port Hope Property”) with the proceeds from the sale of the assets he acquired as part of the uncle’s will. For a time, Mr. Jackson was the sole registered and beneficial owner of the Port Hope Property.

Mr. Jackson eventually transferred the property from himself as sole owner to himself and Ms. Rosenberg as joint tenants, as he intended to leave whatever value remained in the Port Hope Property to Ms. Rosenberg upon his death. Had he used a will to bequeath his interest in the property, Ms. Rosenberg would have had to pay probate fees, so he chose to approach the property transfer through joint tenancy. He also signed a document that indicated that the transfer was a “gift” made for nominal consideration.

After several years, Ms. Rosenberg and her husband informed Mr. Jackson that they intended to upgrade the house for its eventual sale during his lifetime since Ms. Rosenberg had the right to do so as a joint tenant. This was not what Mr. Jackson intended, and he became worried that he would be kicked out of his home. Soon after, Mr. Jackson took steps to sever the joint tenancy. When the matter came before the Court, the Court was asked to determine whether Mr. Jackson’s transfer of the property was a resulting trust rather than a gift, and whether the beneficial ownership would be retained by Mr. Jackson.

Judge Finds Intent to Gift Right of Survivorship, Not Beneficial Interest

The Court found that the evidence before it clearly indicated that Mr. Jackson intended to gift the right of survivorship to Ms. Rosenberg and that there was no intent to have her control the property prior to his death. The judge examined the law on resulting trusts to determine the legal effect of this gift and noted that due to the gratuitous transfer, the presumption of resulting trust applies, therefore, the onus was on Ms. Rosenberg to demonstrate that this transfer was a gift.

The Court found that the facts supported this presumption as Mr. Jackson even signed a document that evidenced his intent during this transfer. However, the judge specified that Mr. Jackson intended to gift the right of survivorship to Ms. Rosenberg, and not to give her control of the property. This intention did not affect the status of the gift, which means the gift was made and cannot be revoked.

However, there is the caveat that the right of survivorship is “a gift of whatever remains at the death of the transferor, not what existed at the date of the transfer.” In other words, Mr. Jackson had the right to do as he pleased with the property during his lifetime, and Ms. Rosenberg had the right to whatever was left. The judge used the example of having a right of survivorship in a joint account; the surviving individual has the right to receive the funds upon death, but the other individual has the right to drain the account beforehand.

Case Serves as “Cautionary Tale”

Although Mr. Jackson could not revoke the gift, he could still sever the joint tenancy, as it was his inherent power to do so. The judge found that Mr. Jackson severed the joint tenancy when he transferred his share of the joint tenancy to himself, ending Ms. Rosenberg’s right of survivorship.

As warned by the judge, this case serves as a “cautionary tale” of using this property title tactic. The parties paid more in legal fees fighting a dispute than the amount they would have saved on probate fees. As such, parties must weigh the potential risks and benefits before entering into a joint tenancy, especially when it is used as an estate planning strategy.

Contact Bader Law in Mississauga for Estate Planning Advice and Drafting Assistance

The trusted estate planning lawyers at Bader Law can help with a wide range of wills and estate matters, including drafting a will, updating a will, as well as probate and estate administration, to ensure that your loved ones are cared for in the event of your passing. Our compassionate team will ensure your unique needs are met and a strategic estate plan is in place so that you can put your mind at ease. Contact us by phone at (289) 652-9092 or reach out to us online to learn how we can assist you with your estate plan.

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Estate Litigation Estate Planning

The Importance of Interpretation: Trustee Powers and Beneficiaries’ Interests

A common theme highlighted throughout our previous estate planning blog posts is the importance of defining an estate trustee’s responsibilities and powers. Well-drafted wills can prevent costly litigation, and even where litigation is necessary, a properly prepared will can assist the court in its interpretation so that the trustor’s intentions and final wishes are fulfilled.

In a recent case before the Ontario Superior Court, an estate trustee brought a motion to prevent a beneficiary from impeding a property sale. In this case, there were competing interests and therefore interpretation of the will was paramount.

Property Vesting in the Estate Administration Act

The Estate Administration Act (also referred to as the “ESA”) is a vital legal framework governing the management and distribution of a deceased individual’s assets and estate. This legislation plays a crucial role in the distribution and settlement of estates, providing a structured and transparent process for both executors and beneficiaries.

The Estate Administration Act also includes provisions that determine property ownership. Specifically, section 9 outlines the process for dealing with real property (land) that has not been distributed to beneficiaries by the deceased person’s representative within three years after their death. If a property is registered under the Land Titles Act or governed by specific sections of the Registry Act, it will automatically transfer to the beneficiaries after a three-year period. However, the personal representative can prevent this automatic transfer by registering a caution in the land registry office. If a caution is registered, the property will not transfer for three years from the registration date.

Nevertheless, section 10 limits the operation of this clause by stipulating that “[n]othing in section 9 derogates from any right possessed by an executor or administrator with the will annexed under a will or the Trustee Act or from any right possessed by a trustee under a will.” This ensures that the legislation does not interfere with the testator’s right to empower their trustee to sell property how the testator sees fit.

Estate Trustee Brings Motion to Vacate Caution

In Marcy v. Marcy, an independent third-party estate trustee brought an urgent motion before the court in response to one of the beneficiaries attempting to prevent the sale of their deceased mother’s property.

The deceased passed away in 2015. The estate trustee had sold the deceased’s house on behalf of the estate and was supposed to close on October 4, 2023, however the respondent, “BM,” an heir to the estate, registered a caution on the title. The estate trustee also sought an order to prevent the respondent from interfering with the closing.

During the motion hearing, the respondent argued that section 9 of the Estate Administration Act was operative as title to the deceased’s property vested in him and his brother since it was more than three years since his mother had passed. The three-year deadline was also completed before the current trustee was appointed. As such, the respondent submitted that the estate trustee did not have a right to sell the property, and the registration of the caution was “reasonable.”

Court Prevents Action to Interfere with Property Sale

The Court disagreed with the respondent’s submissions. Justice Meyers was influenced by the case of Michele v. Di Michele, which dealt with the interpretation of section 9 of the Estate Administration Act. Justice Meyers quoted the decision, which stated:

“Section 9 (and its predecessors) was not enacted to limit the powers given to an estate trustee under a will. Rather, it was intended to give estate trustees additional powers, but only to the extent that the additional powers do not conflict with the provisions of the will. The intention of the deceased, as expressed in his or her will, is always paramount.”

Justice Meyers examined the testator’s intentions through the provisions of the will. The will allowed the estate trustee to “sell, call in and convert into money the whole or any part of [the] estate…in such manner and on such terms…as [the] Trustees in their absolute discretion deem advisable and in so doing to postpone the sale or conversion of any part of the same indefinitely or for such period as [the] Trustees deem advisable…” This clause is unequivocal and falls under the exception of section 10, which prevents the Estate Administration Act from limiting the scope of the testator’s power to enable the trustee to dispose of the property as they see fit.

The Importance of Clear Will Drafting

As demonstrated, the primary principle of having a testator be able to dispose of their assets as they see fit (and, by extension, empowering their trustees to do so on their behalf) is aided by the clear construction of the will. The clause in this case was unambiguous and the estate trustee had the absolute discretion to sell or convert any part of the estate. Further, it was this language that enabled the court to prevent “irreparable harm” to the estate. Thus, if you are considering drafting or updating your will, it is important to work with an experienced estate planning lawyer who can ensure that the provisions contained within your estate planning documents, including your will, allow your intentions to be clearly defined.

Contact Bader Law in Mississauga for Estate Planning Advice and Drafting Assistance

The trusted estate planning lawyers at Bader Law can help with a wide range of wills and estate matters, including drafting a will, updating a will, as well as probate and estate administration, to ensure that your loved ones are cared for in the event of your passing. With care and compassion, our estate planning and estate administration lawyers will ensure your will meets all of your needs. Contact us by phone at (289) 652-9092 or reach us online to learn how we can assist you with your estate plan.

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Estate Litigation Wills & Estates

Secret Trusts and Mutual Wills in Ontario

In the recent case of Gefen Estate v. Gefen, the Ontario Court of Appeal had occasion to provide commentary on the concepts of secret trusts and mutual Wills and how these operate under Ontario’s estate laws. The Court’s decision reviewed two decisions issued by the Ontario Superior Court of Justice in 2019. The complex case involved 61 pre-trial motions, 21 trial motions, and a six-week trial that heard evidence from 22 witnesses.

Wife receives entirety of husband’s $30 million estate

The parties at the trial of Gefen Estate v. Gefen were the children, spouses, and grandchild of Elias and Henia Gefen. At the time of Elias’s passing in 2011, the Gefens had been married for 65 years. During their marriage, Henia and Elias had three sons, Harvey, Harry, and Yehuda.

Upon his death, Elias’s entire estate passed to Henia, who was his sole executor under their mirror Wills. She received approximately $30 million in assets.

Sons allege father provided for their inheritances through secret trust and mutual Wills

The Court heard that prior to and following Elias’s passing, the family dynamics were already “discordant and characterized by conflict”. Henia did not feel that her two younger sons, Harry and Yehuda, should be entitled to a portion of the estate. After Elias’s death, Henia gifted nearly half of her assets directly to Harvey and his daughter, Ashley. Following these gifts, Henia also granted Harvey and Ashley security over the rest of her assets.

Harry and Yehuda attempted to challenge Henia’s competence but were unsuccessful. They also alleged that a document Elias signed two months before his death established a mutual Wills agreement and a secret trust. The agreement, they alleged, was to divide Elias’s estate into equal shares between the three sons on Henia’s death.

What are secret trusts?

The Court of Appeal canvassed legal literature and case law and endorsed the descriptions of secret trusts presented by A.H. Oosterhoff, which reads as follows:

“A secret trust comes into existence when a testator leaves property to a person and that person secretly agrees with the testator to hold the property for the benefit of another person.”

Oosterhoff explains that so long as the legal requirements for a trust are satisfied, the trust can be enforced under equitable principles and the intended beneficiary will receive the property.

How are secret trusts made?

As per Oosterhoff, there are two kinds of secret trusts:

  1. Fully-secret trusts, where the testator leaves their property to a person absolutely. The Will does not disclose either the trust’s existence or the beneficiary’s name.
  2. Half-secret trusts, where the Will leaves the property in question to a person in trust but does not disclose the identity of the beneficiary.

The Ontario Court of Appeal confirmed that in order for a secret trust to be established, there must be the intention to create a legally enforceable trust. A “moral obligation intended to guide the recipient’s conscience” is not enough to create secret trust, even if the testator’s intentions were made clear and acknowledged by the recipient.

What are mutual Wills?

The Court of Appeal explained that a mutual Wills agreement is “a binding contract not to revoke Wills” and is designed to prevent either party from changing their Will without the other’s consent. The requirements for a valid mutual Will contract were described in the Ontario Supreme Court’s 2001 decision in Edell v. Sitzer as follows:

  1. the agreement must satisfy the requirements for a binding contract and not be just some loose understanding or sense of moral obligation;
  2. it must be proven by clear and satisfactory evidence; and
  3. it must include an agreement not to revoke the Wills.

A mutual Wills agreement does not need to be written down, though that would make the process of proving that such an agreement exists easier. In fact, the Court of Appeal noted that a mutual Wills agreement can be “proven from the words of the Will itself or from extrinsic factors.”

Providing the existence of a secret trust or mutual Wills agreement

The Court confirmed that the standard of proof for estate matters, like all other civil matters, is proof on a balance of probabilities. That means that the evidence must “be sufficiently clear, convincing and cogent”.

The Court did note that the “quality” of the evidence that a court will require to meet the standard will vary based on the specific circumstances of each specific claim. In this case, the “evidence had to be sufficiently clear, persuasive and cogent to convince […the court] of the merits of the mutual [W]ill agreement claim on a balance of probabilities”.

No evidence wife entered into mutual Wills agreement

The Court of Appeal found that Henia was not present when Elias signed the document, and there was no evidence that she agreed to restrict her ability to deal freely with the estate assets during her lifetime. As a result, the Court upheld the trial judge’s decision that there was no mutual Wills agreement and no secret trust established by Elias and Henia.

As the decision illustrates, spouses are well-advised to discuss and address their decisions regarding their estate and ensure that any documentation reflects these wishes. If children are to be left out of an estate, that decision is best documented in writing so as to reduce the risk of costly and extensive litigation in the future.

Contact Bader Law in Mississauga for Experienced Advice on Estate Matters

Bader Law provides knowledgeable and trusted guidance on the estate planning process. Our Wills and estate lawyers advise clients on best practices in both simple and complex estate matters to ensure they have a plan in place to protect their interests and minimize their estate tax obligations.

We represent individuals, families, and business owners with comprehensive estate planning and probate matters in Mississauga and throughout the Greater Toronto Area. To book a consultation, call us at 289-652-9092 or reach out online.

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Estate Litigation

Court Refuses to Remove Testator’s Sister as Estate Trustee at Beneficiaries’ Request

In a recent Ontario case, the court refused to remove the testator’s sister as estate trustee after his sons requested the court do so. It is a reminder that courts are often reluctant to remove estate trustees and the bar set to do so is actually quite high.

Testator’s Sister Appointed as Estate Trustee

The testator passed away on December 23, 2018. His last will and testament was dated July 31, 2013. He left behind two sons. At the time of his death, the testator’s assets totalled just over $200,000, with the main asset being the house he lived in with his common law spouse.

On June 13, 2019, the court appointed the testator’s sister as the estate trustee.

Family Members Go to Court of Estate Administration

Later, the testator’s sister applied to court as an estate trustee seeking its assistance in completing the administration of the testator’s estate, claiming that the two sons had been uncooperative. Specifically, she asked the court to direct the sons to deliver documents and provide funds to pay the debts of the estate.

In response, the sons claimed that the sister should be removed as the estate trustee due to mismanagement of the administration of the estate, failure to file tax returns, and improper accounting practices. They also submitted that the court did not have the jurisdiction to hear the sister’s motion.  

Court Dismisses Sister’s Motion for Directions

At the outset, the court began by examining whether it had jurisdiction to issue the directions sought by the sister.

Ultimately, it determined that it did not because her motion pertained to the payment of expenses, fulfillment of duties and delivery of assets and, thus, in the court’s opinion, she could not rely on r. 75.06 of the Rules to secure those types of declarations and orders.

The court clarified that because the relief sought by the sister affected the substantive rights of the sons, she could not proceed by filing a motion for directions.

As such, the court dismissed the sister’s motion.

Court Refuses to Remove Estate Trustee

The court then turned to the sons’ request that the sister be removed as estate trustee.

It explained that the removal of estate trustees is governed by s. 37 of the Trustee Act, which reads as follows:

Removal of personal representatives

37 (1) The Superior Court of Justice may remove a personal representative upon any ground upon which the court may remove any other trustee, and may appoint some other proper person or persons to act in the place of the executor or administrator so removed.

The court then noted that the test for the removal of an estate trustee is high, citing an Ontario Court of Appeal decision which stated:

“Removing an estate trustee should only occur in the “clearest of evidence” and the Court should “not lightly interfere with a testator’s choice of the person to act as his or her estate trustee”.  A removal has been found to be an “unusual and extreme course”.”

The court then reviewed the evidence provided by all parties.

The sons essentially claimed that, not only was the sister responsible for income tax issues, but she had also failed to insure the testator’s home. They further claimed that there had been significant delays for what they described as a simple estate. Finally, the sons stated that they had no confidence in the numbers being provided by the sister and that there was a lack of information being disclosed to them.  

In response, the sister provided a detailed affidavit responding to each of the sons’ allegations. Among her answers, she asserted that the estate was not in fact a simple one, and listed all the steps she had taken to administer the estate. While she acknowledged that there were some miscalculations, she denied that it amounted to mismanagement. Finally, as to the tax liability issue, she recognized that she had misunderstood the accountant, but had communicated her error to the sons as soon as possible.

Ultimately, the court ruled that there was insufficient evidence for the sister’s removal as estate trustee. Among its reasons, the court stated:

“The affidavit evidence reveals that the [sons] and [the sister] have been experiencing some conflict since shortly after the passing of the deceased, which I find is partially due to the [sons] meddling in the administration of the Estate. Improperly interfering in the administration of the Estate or not cooperating with [the sister] will invariably delay things. The [sons] have their role to play in some of the delays.” 

Additionally, the court found no malfeasance of the sister’s part, and concluded that the sons had not met the test for the removal of the sister as estate trustee, instead stating:

“I find that [the sister] is taking her responsibility of administering this Estate seriously and diligently. A clear example is that, despite the dispute with the [sons], [she] has nonetheless continued to administer the Estate by utilizing her own personal funds to pay some of the expenses. This is a true testament of her commitment to fulfilling her brother’s wishes to administer his Estate.”

In the result, the court therefore dismissed the son’s application to remove the sister. 

Contact Bader Law for Experienced Advice on Estate Matters

At Bader Law, we have considerable experience providing insight and legal guidance on the estate planning process, and working with Estate Trustees and beneficiaries throughout the entire probate process. Contact us online or at (289) 652-9092 to learn how we can help.