An estate trustee has a duty to keep accurate accounts of their management of an estate. On occasion, an estate trustee or other interested party may seek formal approval of an accounting, called a passing of accounts, by “passing” them through the courts. Although there are several stages of an estate administration at which a beneficiary may criticize the actions of an estate trustee and/or seek relief from the court in that regard, the passing of accounts is an event where brewing battles over an estate administration tend to come to a head!
In Scott Estate, 2012 ONSC 2516 (CanLII), the estate trustee, Bank of Nova Scotia Trust Company, sought court approval of the accounts prepared for the estate of Walter Alexander Scott, deceased, for the period June 16, 2009 to June 30, 2011. A Notice of Objections to the accounts delivered by Callum Scott, one of the testator`s children, contained several criticisms of the estate trustee`s actions. The Objection included but was not limited to the following:
1. the estate trustee is not entitled to compensation because it had not followed the terms of the will;
2. the estate trustee improperly requested a release in order to distribute Estate assets;
3. the estate trustee improperly withheld partial payment of legacies to ensure the Estate`s ability to make full payment of its obligations; and
4. bills for the consumption of water should not have been paid by the Estate.
In finding in favour of the estate trustee and granting approval of the accounts, the court concluded that the will provisions made it clear that the testator intended to enable the estate trustee to exercise its discretion in making decisions regarding the administration of the estate. The objector may not agree with how the estate trustee exercised its discretion but there was no evidence that the estate trustee abused its discretionary power or acted in bad faith.
Interestingly, the court noted that “The objector … has waged a campaign against the estate trustee that includes letter writing to the C.E.O. of Scotiabank, protests at the local branch of the bank and constructing websites that are critical of the estate trustee and how the estate has been administered.”
The court further concluded that the objections raised by the objector are ill-informed and without merit. For example:
1. The use of releases or similar documents which the objector refused to sign is standard practice when making distributions from the Estate.
2. The objector mistakenly assumed that certain legal terms were synonymous when, in fact, they were not.
3. The issue of the water bill had been corrected. The court stated that regardless, small errors that are capable of correction are not grounds for refusing to approve the accounts.
4. The compensation claimed by the estate trustee was in keeping with a fee agreement signed by the testator.
In light of its decision, the court determined that some part of the legal costs for the passing of accounts should be borne by the objector, holding that there are financial consequences to unnecessary and unsuccessful litigation. The court, therefore, ordered that half of the additional costs incurred as a result of the position taken by the objector should be deducted by the estate trustee from the amount otherwise owed to the objector as a beneficiary and this amount should be applied to the estate trustee’s costs of passing the accounts.
The case also stands for the premise that where substantive law issues are not clearly or adequately understood by beneficiaries or other interested parties, it is recommended they retain legal counsel to advise and represent them on the relevant subject matter(s).
If you have questions or concerns regarding an estate trustee’s performance of their duties, compensation claimed by an estate trustee, beneficiary entitlement under a will or on an intestacy, interpretation of a will, estate accounts or any other aspect of estate administration, please contact Andrea Kelly.
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Andrea Kelly, Lawyer, has extensive experience in wills, trusts, powers of attorney and estate administration matters. She provides clients with a high standard of timely professionalism and expertise, incorporating a very thorough fact finding process. This is quite often enlightening for her clients and facilitates individually tailored services. If you would like to know more, feel free to use the easy contact form or read Andrea’s bio.