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.
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.
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.”
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.
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.
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.