Estate Administration Issues

Administrators, executors and trustees take care of the estate. Their job is to follow the terms of the will or trust and obey the law. However, sometimes estate administration issues can arise. This includes accounting for estate assets and claiming remuneration in what is called “passing the accounts”. If they do not do their job, or do it improperly, estate litigation lawyers can become involved.

We have acted for individuals and families who have challenged, contested or disputed the management of an estate on all of these issues:

Removing executors and trustees,
Holding trustees accountable for failing to follow the law or the terms of the will, estate or trust, and
Holding trustees accountable on a passing of accounts to show what happened to the estate assets and remuneration.

Removing Executors and Trustees

The background to removing executors and trustees are the duties of personal representatives as set out in the common law and Section 142 of WESA. The duties of trustees are set out in the laws of equity and the Trustee Act.

Section 142 (1) WESA A personal representative has the same authority over the estate in respect to which the personal representative is appointed as the deceased person would have if living.

Section 142 (2) WESA A personal representative must exercise authority to administer and distribute the estate in respect to which the personal representative is appointed, account to beneficiaries, creditors and others to whom the personal representative has it law duty to account, and perform any other duties imposed on the personal representative by the will of the deceased person or by law.

Section 15.2 Trustee Act In investing trust property, a trustee must exercise the care, skill, diligence and judgment that a prudent investor would exercise in making investments.

In most British Columbia wills, the executor or personal representative is also the trustee. The job of the personal representative includes making funeral arrangements, taking control of assets, paying debts, notifying beneficiaries, applying for probate, acting impartially between beneficiaries, acting impartially between different kinds of beneficiaries such as life interest and residual beneficiaries, keeping proper accounts, passing accounts and distributing the estate.

Both personal representatives and trustees can be removed if they do not do their job. They can be removed under WESA, the Trustee Act and the inherent jurisdiction of the Supreme Court of British Columbia.

Section 158 (3) WESA Subject to the terms of a will, if any, the court, by order, may remove or pass over a person otherwise entitled to be or to become a personal representative if the court considers that the personal representative or person entitled to become the personal representative should not continue in office or be granted probate or administration, including, without limitation, if the personal representative or person entitled to become the personal representative, as the case may be, is incapable of managing his or her own affairs, is unable to make the decisions necessary to discharge the office of personal representative, is not responsive, or is otherwise unwilling or unable to or unreasonably refuses to carry out the duties of a personal representative.

Section 30 Trustee Act A trustee or receiver appointed by any court may be removed and a trustee, trustees or receiver substituted in place of him or her, at any time on application to the court by any trust beneficiary who is not under legal disability, with the consent and approval of the majority in interest and number of the trust beneficiaries who are also not under legal disability.

While Section 30 of the Trustee Act authorizes the removal of a trustee on the application of a beneficiary, it does not authorize one co-executor and co-trustee removing the other co-executor and co-trustee. In the 2011 decision Levi Bandel v. McKeen, Richter Trial Lawyers | thegoodfirm applied to remove the co-executrix and co-trustee. Judge Butler relied on the inherent jurisdiction of the Supreme Court to remove her as co-executrix and co-trustee.

Failing to Follow the Law or the Will: Breach of Trust

In holding trustees accountable for failing to follow the terms of the will or failing to follow the law relating to trusts, Judge Ballance set out the law in the 2007 Supreme Court decision (Langley, Bevans and Julson v. Brownjohn, 2007 BCSC 156) at paragraphs 51 and 52:

[51] The standard of care expected of a trustee is a demanding one, but is not one of perfection. Although articulated in various ways in the case authorities, the settled measuring stick is that a trustee must act as a careful, skilful and prudent person of business who is managing property in favour of others: See: Fales v. Wohlleben Estate [1997 ] 2 SCR 302[Fales]; and Waters Law of Trusts in Canada, supra, pages 920, 922.

[52] A breach of trust occurs when a trustee fails to carry out his obligations under the terms of the trust, under the rules of equity or imposed by statute. It may take the form of neglect, performing below the requisite standard of care in other ways or acting contrary to a trust obligation. If a breach of trust is established then, unless the court excuses the trustee from responsibility or the beneficiaries have all approved the breach, the trustee will be liable to compensate the beneficiaries for the loss which the breach has caused: Fales; and Waters Law of Trusts in Canada, at pages 1215 16 and 1224 25. (Emphasis added.)

We have acted for individuals and families when the trustees, including corporate trustees, failed to carry out obligations under the terms of the trust, under the rules of equity and imposed by statute. If you are concerned about the behaviour of a trustee, please contact us for a consultation.

Passing Accounts, the Duty to Account and Remuneration

Executors, administrators and trustees must keep detailed records of all capital, expense and income transactions with documents, invoices and receipts. Sometimes they forget they are taking care of other people’s money.

Section 99 (1) Trustee Act Unless his or her accounts are approved and consented to in writing by all beneficiaries, or the court otherwise orders, an executor, administrator, trustee under a will and judicial trustee must, within 2 years from the date of the grant of probate a grant of administration or within 2 years from the date of his or her appointment, and every other trustee may at any time obtain from the court an order for passing his or her first accounts, and he or she must pass his or her subsequent accounts at the time the court directs.

Section 99 (1) is mandatory and can only be waived by the approval and consent of all beneficiaries, vested and contingent. In those cases where there is a minor or unascertained beneficiary, the passing of accounts cannot be waived and must go before the court. Even though the majority of accounts are approved and consented to in writing by beneficiaries, there is a new process for passing accounts set out in the Supreme Court Civil Rules.

Master Joyce in Re: Estate of Fannie Cleverley 2000 BCSC 1454 at paragraph 25 set out the function of the court on a passing of accounts, “the function of the court is to determine whether the executor has exercised his duties under the will properly and in accordance with the law.”

In addition to the passing of accounts, there is also a common law duty, partially incorporated in the Trustee Act, to be ready at all times to account to persons who have a beneficial interest in the estate including creditors.

We have acted for individuals and families to challenge, contest and dispute trustee accounts. If you want to discuss the accounts of an estate, contact us today to book an appointment.