Removing an Estate Trustee
Estate trustees play a critical role in ensuring that the last wishes of a testator are honored through the administration of the deceased’s estate and the distribution of its assets to beneficiaries.
However, what if an estate trustee fails to discharge their duties?
Sometimes, the need to remove an estate trustee is obvious. For example, if the estate trustee has committed some egregious breach of trust, has misappropriated trust property or otherwise cannot account for it.
In addition to the court’s inherent jurisdiction[1], sections 5 and 37 of the Trustee Act[2] provide the court with statutory jurisdiction to remove and/or replace an estate trustee if warranted.
However, removal of an estate trustee is a drastic remedy, as a testator’s wishes as to who should act as trustee should only be interfered with in rare circumstances[3]. Generally speaking, a named trustee should only be removed on the “clearest of evidence”, and only where there is no option available other than removal[4]. Even if a trustee is of bad character, or there is friction between co-trustees, this may not alone justify removal[5]. Rather, the welfare of the beneficiaries is paramount[6].
In Virk v. Brar Estate[7], the Ontario Superior Court of Justice set out some relevant principles for the removal of an estate trustee as follows:
The court will not lightly interfere with the testator’s choice of estate trustee;
There must be a “clear necessity” to interfere with the discretion of the testator;
Removal of an estate trustee should only occur on the clearest of evidence that there is no other course to follow;
The court’s main guide is the welfare of the beneficiaries;
The non-removal of the estate trustee will prevent the proper execution of the trust; and
The removal of an estate trustee is not intended to punish for past misconduct; rather it is only justified if past misconduct is likely to continue and the estate assets and interests of the beneficiaries must be protected.
In some cases, the need to remove an estate trustee may be less clear. What if co-estate trustees simply cannot get along, deadlocking the administration of an estate?
For example, it is very common for a testator to name his or her spouse and/or one or more children as co-estate trustees of his or her estate under a will. In many cases, this leads to no issues if the co-estate trustees are able to cooperate in the proper administration of the estate and the discharge of their fiduciary duties to the beneficiaries. However, what if the co-estate trustees do not get along, or worse, fundamentally disagree on how the estate should be administered?
In our experience, the failure to cooperate amongst co-estate trustees, or even outright animosity between them, is a leading source of estates litigation. When a fight between co-estate trustees hinders the proper administration of the estate, the court’s intervention, or threat of intervention, is often necessary.
The courts are generally loath to interfere with a testator’s wishes on the basis that two or more co-estate trustees cannot get along with each other unless the failure to remove one or more of them is imperiling the proper administration of the estate. If that is so, the courts will generally not hesitate to act to rectify the situation.
Although the test to remove a trustee is onerous, it is not insurmountable in all cases. For example, in Rose v. Rose[8], hostility between the beneficiaries and the trustee justified the latter’s removal, including because the trustee had an interest in using the trust property herself.
In Radford v. Wilkins[9], the Ontario Superior Court of Justice confirmed that friction between co-estate trustees may justify removal:
Friction between co-estate trustees is likely to warrant the removal of either or both of them because it is prone to impact the decision-making process. However, this is a more remote likelihood where the friction is between a trustee and a truculent beneficiary. Of course, in either case, the friction must be of such a nature or degree that it prevents, or is likely to prevent, the proper administration of the trust.
In Venables v. Gordon Estate[10], the court held that it would “readily intervene…if the conflict is between co-Trustees”, and removed a trustee on this basis. Similarly, in Re: Newton Trust[11], the court found that distrust and suspicion between a beneficiary and a trustee, or where the trustee favours one beneficiary or group of beneficiaries over another, there may be sufficient cause to remove a trustee.
These cases all show that whether an estate trustee should be removed by the court is an inherently fact-driven inquiry. The circumstances that may justify removal in one case may not be sufficient in another.
The foregoing is only a broad overview of some of the factors a court may take into account in deciding whether to remove an estate trustee. Please contact us for a free initial consultation about your particular situation.
[1] St. Joseph’s Health Centre v. Dzwiekowski, [2007] O.J. No. 4641 (S.C.J.) at para. 25.
[2] Trustee Act, R.S.O. 1990, c. T.23.
[3] Chambers v. Chambers, 2013 ONCA 511 at para. 95; Weil, Re, 1961 CanLII (ON CA) at p. 889.
[4] Chambers v. Chambers, 2013 ONCA 511 at para. 95.
[5] Chambers v. Chambers, 2013 ONCA 511 at para. 95.
[6] Ricci v. Ricci, 2016 ONSC 6614 at para. 27.
[7] Virk v. Brar Estate, 2014 ONSC 4611 at para. 48.
[8] Rose v. Rose 2006 CarswellOnt 3776.
[9] Radford v. Wilkins, 2008 CanLII 45548 (ON SC) at para. 113. (emphasis added).
[10] Venables v. Gordon Estate, 2012 ONSC 956 at para. 30.
[11] Re: Newton Trust, 2014 BCSC 882 at para. 93.
